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Former Goldman programmer indicted over HFT code theft

12 February 2010  |  8151 views  |  0 Mouse

Former Goldman Sachs computer programmer Sergey Aleynikov has been indicted on charges related to the theft of propriety code connected to the investment bank's high-frequency trading platform.

Aleynikov has been charged in a three count indictment with theft of trade secrets, transportation of stolen property in foreign commerce and unauthorised computer access. He faces a maximum of 25 years in prison.

The accused 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.

The programmer 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 allege 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 encrypted the files and transferred them over the Internet and then deleted "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 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 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, say prosecutors.

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

Goldman's HFT platform - which it took control of in 1999 through the acquisition of Hull Trading Company for $500 million - generated the firm "millions of dollars per year in profits".

FBI assistant director-in-charge Demarest says: "Proprietary information and trade secrets are sometimes the most valuable assets of a business. The computer code Aleynikov copied was worth millions."

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