23 July 2014

Goldman programmer's conviction for stealing HFT code overturned

17 February 2012  |  5598 views  |  0 Man writing graphs on glass wall

Former Goldman Sachs programmer Sergey Aleynikov has had his conviction for stealing the bank's propriety high-frequency trading code overturned by a federal appeals court.

Aleynikov was found guilty by a Manhattan jury in December 2010 of theft of trade secrets and interstate transportation of stolen property. The following month a judge sentenced him to 97 months in jail followed by three years of supervised release and fined him $12,500.

However, yesterday the United States Court of Appeals for the Second Circuit ordered the trial court to enter a judgement of acquittal, according to the New York Times. The reversal - which came hours after a three-judge panel heard oral arguments on the appeal - will be explained in an opinion "in due course".

Aleynikov's lawyer Kevin Marino told the Times: "Mr Aleynikov spent a year in prison and suffered many other losses as a result of these unjust charges, but he never lost faith in his ability to win an acquittal. This is a wonderful day in his life."

The Russian-born programmer worked for Goldman from May 2007 to June 2009, where he developed computer programs supporting the firm's high-frequency trading on various commodities and equities markets.

Aleynikov then quit Goldman to help develop a HFT platform for Teza Technologies, a Chicago-based start-up formed by ex-Citadel executive Mikhail Malyshev.

Prosecutors alleged that on his last day working for the bank, Aleynikov transferred "substantial portions" of Goldman Sachs's proprietary computer code for its trading platform to an outside computer server in Germany.

He was accused of encrypting the files and transferring them over the Internet and then deleting "the program he used to encrypt the files and deleted his computer's "bash history," which records the most recent commands executed on his computer".

In addition, he had already allegedly transferred "thousands of computer code files" related to the firm's proprietary trading program to his home computers during his two years working there. He did this by e-mailing the code files from his Goldman Sachs account to his personal one and storing versions of the code files on his home computers, laptop, a flash drive and other storage devices, said prosecutors.

On 2 July 2009 Aleynikov flew to Chicago to meet Teza, taking a laptop and storage device allegedly holding the valuable Goldman proprietary code. He was arrested the following day at Newark airport, later charged and eventually convicted.

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