Ex-Goldman HFT Programmer Sergey Aleynikov Indicted, Faces 25 Years In Prison

Sergey Aleynikov, the former Goldman programmer, who was arrested by the FBI in July last year on virtually a day's notice after Goldman told the FBI the Russian had stolen secrets that could be used to manipulate markets, has just been indicted on charges he stole computer codes used for proprietary high-frequency trading programs. The specific charges include theft of trade secrets, transportation of stolen property in interstate and foreign commerce and unauthorized computer access. The charges carry a total jail time of 25 years.

As is now well-known, Aleynikov, shortly before his departure from Goldman, was hired by Misha Malyshev's Teza Technologies. The firm was founded after Malyshev left his former post as head of High Frequency Trading at Citadel. According to prosecutors, in July 2009 Sergey flew to Chicago and brought a laptop and another storage device containing Goldman's proprietary souce code to a meeting at Teza's office. Malyshev has denied any allegations that he has received Goldman's prop HFT code.

The indictment comes at a time when most observers had expected this case would be settled quietly, as the prevailing sense was the Goldman had no actionable case, especially after numerous months of court delays.

The question now is how much information will be made available for discovery, and how much will be filed under Seal so that no additional Goldman HFT secrets enter the public domain.