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6 Years And One Witch Hunt Later, Goldman Changes Its Mind On "Secret Sauce" Software

Tyler Durden's picture




 

For anyone who didn’t read Flash Boys or who hasn’t otherwise apprised themselves of the history behind the proliferation of the parasitic, vacuum tubes that have embedded themselves between real buyers and sellers in order to extract a tax on each and every trade in the name of "providing liquidity", you might have missed out on the sad story of Sergey Aleynikov, the Russian computer programmer and target of a six-year Goldman witch hunt.

In 2010, a federal court convicted Aleynikov of stealing trading code from Goldman. As WSJ notes, Aleynikov was "acquitted of those charges on appeal, then charged again by the Manhattan District Attorney and convicted a second time, [before] a state judge dismissed the case last month on grounds that prosecutors failed to show enough evidence to support the verdict."

And while the Manhattan DA is appealing the ruling, Goldman is busy doing the exact same thing that Aleynikov is supposedly "guilty" of - distributing open source code. Here’s WSJ with the story:

Goldman will soon offer clients access to more of its in-house tools, such as high-powered databases that analyze markets and manage risk, according to the firm’s executives. Those proprietary systems have long been key elements enabling Goldman to sidestep market turmoil and ring up outsized profits in better conditions.

 

Given direct access to these tools, Goldman clients could use the technology to build their own trading systems and potentially make purchases independent of the firm.

 

But the firm’s executives believe the upside outweighs those concerns. Goldman is betting that its clients, such as hedge funds and other money managers, will use the individual applications, or apps, to develop strategies and then execute their trades with the firm.

 

By deepening ties with those clients, Goldman hopes it will pick up other business from them as well.

The development has been a centerpiece of a new technology strategy developed by R. Martin Chavez, the firm’s chief information officer.

 

“We’re constantly asking ourselves about all of it,” Mr. Chavez said. “Is this software better for clients and the planet if it’s inside Goldman? Or is it better if we extend the platform to clients, or in some cases does a spinout into open source or a company make more sense?”

Now clearly, there are all kinds of amusing things about that last statement, including the notion that anything going on over at 200 West is good "for the planet" (they're just "doing God's work" over there, you know), but the idea that the firm now sees the utility in actively distributing open source code when by all accounts what Aleynikov took with him on the way out the door wasn't proprietary at all, is evidence of blatant hypocrisy on the part of current management or complete incompetence on the part of those who came before - or both. 

Furthermore, one wonders what happened to the notion that allowing this type of code to fall into the "wrong" hands, would be the capital markets equivalent of giving al-Qaeda a suitcase nuke. Remember, Goldman's contention when Aleynikov was arrested was that the code he allegedly stole (the open source code) could be used to "manipulate markets in unfair ways." Does that, by extension, mean that Goldman will now equip its most important clients with the tools to manipulate markets? 

Well yes, but that doesn't mean they weren't already doing that. Here's the Journal again:

The concept of giving clients potentially valuable information in hopes of winning business isn't unprecedented: Goldman and other investment banks have for years given clients trading ideas and market research on the same presumption.

Of course given what we know about the tendency for Goldman to "muppetize" clients who take the firm's "recommendations" at face value, we can't help but wonder if the same fate isn't in store for anyone who buys what the bank is selling (or giving away) in terms of software. 

In any event, one thing we're quite sure of is that Goldman won't be trying to convince the Manhattan DA that given the firm's enlightened stance on open source software, the torment of Sergey Aleynikov should finally come to an end.

 

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Wed, 08/12/2015 - 21:06 | 6420600 knukles
knukles's picture

Jesus threw the money changers from the temple for a reason.
May you fuckers rot in Hell.
This is just unconscionable.

Wed, 08/12/2015 - 21:08 | 6420612 JC-BI
JC-BI's picture

They're not doing this out of the goodness of their hearts. Those tools will probably be rigged so clients can lose their money down the Goldman's rabbit hole, Especially as Goldman is one of the Fed's Founders

https://biblicisminstitute.wordpress.com/2015/07/28/how-the-ashkenazi-je...

Wed, 08/12/2015 - 21:11 | 6420626 TeamDepends
TeamDepends's picture

Qwikcookedbooks

Wed, 08/12/2015 - 21:17 | 6420638 AlaricBalth
AlaricBalth's picture

-"Goldman is betting that its clients, such as hedge funds and other money managers, will use the individual applications, or apps, to develop strategies and then execute their trades with the firm."

Yes, of course. With a well disguised line of code which will enable Goldman to see which trades their "clients" are about to execute so that Goldman can front run them.

Wed, 08/12/2015 - 21:20 | 6420639 wee-weed up
wee-weed up's picture

 

 

Anyone who wants to know how "the market" REALLY works needs to read "Flash Boys."

Anyone who wants to know how anal & vindictive Goldman brass can be also needs to read "Flash Boys." It describes in detail what they did to Sergey Aleynikov. It was inhumane & abominable.

Thu, 08/13/2015 - 00:01 | 6421148 waterwitch
waterwitch's picture

Fuck GS

Thu, 08/13/2015 - 03:00 | 6421361 Oliver Jones
Oliver Jones's picture

The line of code won't even be in the source code: It will be in a doctored compiler that Goldman mandates (e.g. Intel icc, Microsoft compiler), that conveniently adds the code by stealth, when compiled from clean source.

It's an old trick, too: Ken Thompson bugged the UNIX compiler and login binaries, to allow him to log in with the username "kt" and a known password, regardless of whether the "kt" user was in /etc/passwd. The compiler also targeted itself, making sure that the compiler bugs were deliberately reinserted if the compiler ever compiled itself.

Google "Reflections on Trusting Trust" for more information. If you also like a nice technical read, The Register has a nice piece about a Ring -2 flaw that existed in the Pentium Pro architecture for 16 years until it was fixed in Sandy Bridge (not so long ago!) Lots of vulnerable hardware out there...

Wed, 08/12/2015 - 22:21 | 6420883 black rifles ar...
black rifles are cool's picture

They'll just say they were managing risk as they take them (clients - or as they like to call them "muppets") down.

Wed, 08/12/2015 - 21:08 | 6420614 yrad
yrad's picture

Agree Knucks. Hang them all. Eat the babies.

Wed, 08/12/2015 - 21:09 | 6420622 knukles
knukles's picture

The actions of these people alone is ruining what little faith I have left in man.

Wed, 08/12/2015 - 21:12 | 6420630 yrad
yrad's picture

The actions of these people reinforces the only consistent pursuit of man.

MOAR!

Wed, 08/12/2015 - 22:05 | 6420791 Richard Chesler
Richard Chesler's picture

"A pack of thieving jews will adapt in order to reduce their cost of regulation" - General Systems Theory 101.

 

Welcome to the real world bitchez.

 

Wed, 08/12/2015 - 21:14 | 6420633 Rock On Roger
Rock On Roger's picture

Man isn't the problem.

 

The greed of zion is the problem.

god's work ya know.

Wed, 08/12/2015 - 21:08 | 6420615 barliman
barliman's picture

 

Wait ... What?  Are you sure THIS isn't hell, knukles?

Wed, 08/12/2015 - 21:23 | 6420660 junction
junction's picture

The big question: Will Goldman Sachs ask for a refund from Manhattan DA Cyrus Vance Jr. for the several million dollars Goldman wired to Vance's numbered account to get him to launch this bogus prosecution?

Wed, 08/12/2015 - 21:06 | 6420607 logicalman
logicalman's picture

The Squid writes the rules to the game it is playing.

How can they lose?

 

Wed, 08/12/2015 - 21:09 | 6420620 yrad
yrad's picture

Greed and infighting?

Wed, 08/12/2015 - 21:09 | 6420623 Ladioss
Ladioss's picture

By the end of a rope.

The day the people grow a backbone again.

Wed, 08/12/2015 - 21:11 | 6420627 barliman
barliman's picture

 

SMOD ... the return of Gozer ... seeing Hillary Clinton naked

Lots of ways to lose ...

Wed, 08/12/2015 - 21:10 | 6420624 nmewn
nmewn's picture

Unfair! Unfair! You've expropriated our unfair advantage! We'll sue!

Fuckin wankers.

Wed, 08/12/2015 - 21:19 | 6420642 yrad
yrad's picture

Foxes in control of the henhouse.

Where the fuck are the Regulators?? Hahaha

Wed, 08/12/2015 - 21:33 | 6420693 nmewn
nmewn's picture

The entirety of the state of New Yawk would absolutely collapse into utter fucking bankrupt ashen heep without the best and brightest progressive minds of neo-Keynesian, socio-economic debt printing theory leading the way Forward!

Its a fucking joke man, look at them, print us moar fresh cash or we'll crash the economy!...lol...fucking really? 

Vampires.

Wed, 08/12/2015 - 21:26 | 6420668 Motorhead
Motorhead's picture

Wankers!  Fuckin' A, man!

Wed, 08/12/2015 - 21:12 | 6420628 i_call_you_my_base
i_call_you_my_base's picture

"the individual applications, or apps"

Man, I would've been lost without that, thanks.

In any case, yes, let's use a platform (the actually word you are looking for) of a corrupt, front-running, quote stuffing bank to execute my trades. Good fucking idea.

Wed, 08/12/2015 - 21:26 | 6420666 Motorhead
Motorhead's picture

All right, gang, we are all sick & tired of this nonsense, so when's the revolution?  Personally, I'm booked solid for the next three weeks, so I won't be of much assistance, then after that, I'll be on night shift.

Wed, 08/12/2015 - 21:31 | 6420681 Seasmoke
Seasmoke's picture

Moving the Goalposts in the middle of the game ,as usual.....

Wed, 08/12/2015 - 22:03 | 6420816 redd_green
redd_green's picture

Hold on! Aleynikov got hired by another Russian who was working at Citadel.     *Aleynikov* said it was open source.  Should we believe him?   Aleynikov did something so stupid every single software engineer I know who read the story walked away shaking their heads in disgust: Aleynikov ftp'd source code FROM goldman servers to a share server in Europe (think it wasGermany), then the idiot erased his shell command history thinking that no one was watching.   Idiot. Of f**king COURSE Goldman has people watching people who watch people who watch people....  You take a dump and they know about it.  If it was f**king open source, then he would NOT have ftp'd it out of goldman servers, he would have just gotten the open source from, well, open source servers, and sure the hell would not hav erased his shell commands to try (as a 2 year old would try to hide stolen chocolate under the matteress) to hide what he did.  idiot.

Thu, 08/13/2015 - 02:13 | 6421322 malek
malek's picture

So in your reasoning the single fact of erasing the shell command history (which can be a single text file such as .bash_history) proves he meant mischief?

Are you fukkin' kidding me

Wed, 08/12/2015 - 22:03 | 6420823 Peter Pan
Peter Pan's picture

They are not trying to punish Aleynikov. They are simply trying to scare others that if they try anything they will be hounded to the nth degree. It's all about the deterrent effect in this case.

Wed, 08/12/2015 - 22:05 | 6420828 redd_green
redd_green's picture

Anyone stupid enough to transfer copies of your employers source code, open source or not, is a complete idiot.   I can't say this guy desrved what he got, but he deserved something.  Idiot.

Wed, 08/12/2015 - 22:10 | 6420853 Seek_Truth
Seek_Truth's picture

You earn +100 slave points.

You make a very fine slave.

Wed, 08/12/2015 - 22:17 | 6420876 black rifles ar...
black rifles are cool's picture

Meanwhile ... Nav Sarao, the former prop trader who figured out how to take the other side of the algos and beat them at their own game with a big account and 'nads of steel  from his parents basement (using technology that was about 10 years old) is locked up.  Dat's f@cked up.

Wed, 08/12/2015 - 23:08 | 6421032 JR
JR's picture

Goldman seems to be everywhere, into everything, but did you know it also is into warmaking?

The U.S. government, of course, not only wages war around the world and is also involved in “financial warfare.” But many people don’t realize the major role played by the Big Banks in military warfare as well as financial warfare with a close relationship to the policies and assaults by the Pentagon and NATO. Professor Michel Chossudovsky this week has given frightening details on the worldwide connection banks make to financial warfare. Especially poignant is Chossudovsky’s personnel review of the first class financial war machine of Goldman Sachs. Here’s Chossudovsky:

In early August, Goldman Sachs appointed NATO’s former Secretary General Anders Fogh Rasmussen as a financial consultant.

Over the last five years (2009-2014), Rasmussen was actively involved in coordinating NATO’s humanitarian bombing raids in the Middle East not to mention NATO military deployments on Russia’s doorstep in Eastern Europe, the Baltic States and the Black Sea.

During his stint as Prime Minister of Denmark (2001-2009), Rasmussen was involved (under a neoliberal policy agenda) in dismantling Denmark’s welfare state alongside the privatization of state assets.

Rasmussen’s consulting advice will be used as part of Goldman’s political lobbying in the EU, namely the process of influencing political and strategic decision making.

Moreover, Goldman’s multibillion dollar investment decisions, its inside trading operations, its various speculative actions on the commodities, forex, precious metals markets, etc, require detailed inside information/ political coordination pertaining to geopolitical and military affairs.

Rasmussen joins a long list of  prominent officials and political personalities who are acting as consultants for Goldman Sachs.

Mayor of Chicago Rahm Emanuel who was Obama’s Chief of Staff, was also consultant to Goldman. His role “was to “introduce us to people”, in the words of one Goldman Sachs partner at the time.”

Peter Sutherland who was EU commissioner, trade negotiator and subsequently Director General of the World Trade Organization (WTO) was appointed in 2005 to Goldman Sachs as a non-executive Chairman. He ended his 20 year stint with Goldman in 2015.

Robert Zoellick, former president of the World Bank joined Goldman Sachs in 2013 as chairman of the bank’s board of international advisers. Zoellick had previously held several high ranking positions in the US administration. He was Deputy Secretary of State (2005–2006) under the Bush administration.

It works both ways: government officials are appointed to Goldman; in turn Goldman Sachs officials are appointed to key positions in government.  George W. Bush’s Secretary of the Treasury Henry Paulson (2006-2009) was a former Goldman Sachs chairman and CEO. He was appointed to the Treasury two years before the 2008 financial crash.

These appointments enable Goldman Sachs among other Wall Street mega banks to manipulate government policy.

It also provides them with an inroad into the corridors of the Treasury, not to mention the central banks: e.g, the notorious appointment of  a former Goldman Sachs official (and Canadian citizen) Mark Carney to the position of governor of the Bank of England. Carney previously held  the position of Governor of the Bank of Canada. He also heads the G20?s Financial Stability Board.

Mario Draghi, was vice chairman and managing director of Goldman Sachs International (2002–2005), before his appointment as Governor of the Bank of Italy (2005-2009). In 2011, he was appointed Governor of the European Central Bank (ECB).

Goldman Sachs is a Trojan Horse with its former banking officials deployed in key governmental positions.  These appointments provide Goldman Sachs with the ability to influence and oversee the conduct of macro-economic policy.

Moreover, their former officials will provide them with inside information emanating from within the governmental structure. –i.e market rigging by major financial institutions will invariably require advanced knowledge regarding actions or decisions taken  within the government and military-intelligence apparatus.

Regulating The Next Wall Street Financial Crash 

Barely acknowledged by the financial media, another notorious appointment of a Goldman official pertains to the Security and Exchanges Commission (SEC)  In May 2015, Goldman official Andrew J. “Buddy” Donohue  was appointed SEC chief of staff for Mary Jo White which enables him to “regulate Wall Street” so to speak on behalf of Wall Street.

This is a timely appointment. Financial markets including the multi-trillion trade in derivatives are in a state of disarray. They are exceedingly unstable, largely as a result of market rigging and speculative activity by powerful actors, not to mention the lack of regulatory procedures.

Goldman Sachs Inc. played a central role in the 2008 financial meltdown, with their former chairman and CEO Henry Paulson in charge of the US Treasury.

In a bitter irony, Institutional speculators  are in charge of regulating financial markets. The next financial crash, were it to occur, will be be “regulated” by the SEC with former Goldman Sachs official Andrew J. “Buddy” Donohue in the driver’s seat, acting on behalf of a handful of “too big to fail, too big to jail” financial institutions.

Let us not despair: Goldman Sachs does not control the US Treasury.  It’s in the hands of a former Citigroup official Jacob Lew -who according to expert opinion is slated to act “responsibly” in the case of a stock market crisis.

During his stint at Citigroup which preceded the 2008 financial crisis, Lew was in charge of a speculative hedge fund investment unit which consisted according to a 2010 Huffington Post Report in shorting or betting “on the housing market to collapse.”:

[Concern was expressed when he was appointed Budget Director regarding] his unit’s investments in a hedge fund that bet on the housing market to collapse — a reality suffered by millions of American homeowners.  … But in an age in which the housing collapse led to a financial upheaval that cost 8 million American jobs and plunged the nation into its deepest recession since the Great Depression, bets [coordinated by Jack Lew] that profited off the collapse may not be perceived in the best light.

It is worth noting that Treasury Secretary Jack Lew was also involved in what is best described as “legal tax evasion” through the transfer of Citigroup funds to the Cayman islands. According to the Weekly Standard (February 2013), Jack Lew:

oversaw as many as a hundred Cayman Island investments when he worked at Citi Bank as chief operating officer of the alternative investment services unit, SEC disclosures reveal. It has previously been reported that Lew himself had been invested in a fund that was based in the Cayman Islands.  …

http://www.globalresearch.ca/us-nato-military-deployments-economic-warfare-goldman-sachs-and-the-next-financial

Thu, 08/13/2015 - 02:47 | 6421350 Blankenstein
Blankenstein's picture

Don't forget Robert Rubin was Treasury Secretary under Slick Willie after spending 26 years at the Squid, several as co-chairman.

 

https://en.wikipedia.org/wiki/Robert_Rubin

Thu, 08/13/2015 - 00:55 | 6421231 onmail
onmail's picture

See what a Goldman Sachs backed Mutual Fund Ad says in India :

NOW EVERY BODY CAN BE A KING

Well its a fact that everybody cannot be a king (can one?)
Its a total lie
Then why sell this? mabbe they think that everyone is a fool
and rather make them wear fools caps in disguise of a king's

Thu, 08/13/2015 - 01:21 | 6421263 Reichstag Fire Dept.
Reichstag Fire Dept.'s picture

If Goldman Sachs is "giving" something away to a client, you can be assured, it's because they've got something better.

Thu, 08/13/2015 - 03:11 | 6421369 jack stephan
jack stephan's picture

I hope you blood sucking bankers spent more time shooting instead of eyeballing graphin graphs .  you stole my grandparents retirement...... get drunk all you like, you spent the last three years in a tanning bed, i spent 3 years getting shot at and practicing.

IM TELLING IM NOT ASKING, LEAVE AND QUIT.  IF YOU ARE NOT COMPLETELY HOLLOW, DROP IT AND LEAVE.

Thu, 08/13/2015 - 06:20 | 6421500 Dajd45
Dajd45's picture

Funny!!!! "Goldman Sachs rather chequered history"............rather like saying 'Al Capone was just misunderstood, really'..........

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