A US Appeals Court says that it overturned the conviction of former Goldman Sachs programmer Sergey Aleynikov for stealing the bank's propriety HFT code because such code is "intangible property" and so not covered by the laws he was charged under.
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, in February the United States Court of Appeals for the Second Circuit ordered his release. An opinion explaining the decision now says that the laws under which he was charged - the National Stolen Property Act (NSPA) and the Economic Espionage Act (EEA) - don't apply to his case.
The three-judge panel says that the NSPA was not violated because: "By uploading Goldman's proprietary source code to a computer server in Germany, Aleynikov stole purely intangible property embodied in a purely intangible format."
"We decline to stretch or update statutory words of plain and ordinary meaning in order to better accommodate the digital age," says Judge Dennis Jacobs.
Meanwhile, because the Goldman HFT system "was not designed to enter or pass in commerce, or to make something that does, Aleynikov's theft of source code relating to that system was not an offense" under the EEA either.
The opinion concludes a three year long saga involving the Russian-born programmer, who 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.
He quit Goldman to help develop a HFT platform for Teza Technologies, a Chicago-based start-up formed by ex-Citadel executive Mikhail Malyshev but on his last day working for the bank, transferred "substantial portions" of Goldman Sachs's proprietary computer code for its trading platform to the outside computer server in Germany.
Read the full opinion:Download the document now 85.9 kb (PDF File)