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Prosecutors Request Closed Courtroom For Goldman HFT Programmer's Trial
dave562 writes "Goldman Sachs' lawyers have asked the Federal judge to seal the court room during the trial of Sergey Aleynikov. Aleynikov was one of the programmers who developed Goldman's High Frequency Trading (HFT) programs. What does this say about the state of the financial industry? Given the problems HFT seems to have caused over the last few years, shouldn't more light be shined into the dark corners of how it works?"
I could see the closed doors. If the guy says he didn't, and then they start pulling up source code, then I would personally not be happy if that source code was just shown to the world if I was working on a closed source project
The world is how you make it
Not that I approve of HFT in any way shape or form. But this guy is going to be talking about the system that allows the to have an edge over their competitors. If I were in that company's position, I'd very much like that testimony to remain sealed as well.
-Rick
"Most people in the U.S. wouldn't know they live in a tyrannical state if it walked up and grabbed their junk." - MyFirs
What does this say about the state of the financial industry? Given the problems HFT seems to have caused over the last few years, shouldn't more light be shined into the dark corners of how it works?
No... then they’d actually have to fix it...
Alexander Peter Kristopeit bought his basement from his mommy for one dollar.
Normally, I'd nitpick about how the Federal Prosecutors asked for this and not Goldman's lawyers. However, with the political and economic landscape being what they are, federal prosecutors have really become Goldman's lawyers.
My postings are informational and does not constitute legal advice. Act on it at your risk.
How is this type of computer system that trades before anyone else even CAN considered fair or even legal? You get to control and possibly even direct the market with this tool.
This is a monopoly on the stock market, WAY too much power in the hands of one company.
He who knows best knows how little he knows. - Thomas Jefferson
Or maybe the massive drop off in political contributions from Wall Street following all the tar and feathering they have been getting from the current administration (far beyond the taring and feathering that they DO deserve) has gotten some peoples attention and they really are concerned with their ability to fund raise, I mean the ability of companies not to be unjustifiably victimized just because they happen to be *gasp* profitable.
Do your lips get chapped from smoking Wall Street pole all day long, or have you gotten used to it? The "justified" response to the clusterfuck caused by the investment banks would have been to nationalize them and put the execs in JAIL. The fact that they're STILL whining despite record profits demonstrates that they're just bitches.
Just do not allow those firms to act as a market maker, broker, banker and a trader at the same time.
Those firms should only be allowed to act as one part of the system and be restricted from taking advantage of acting as a multi-role entity by the law.
OK, for all you whiners about the evils of software patents, this is what you get - secret algorithms.
And this is a problem because?
'Secret algorithms' are far less painful than patents, because anyone can produce their own algorithm, whereas no-one can use tech covered by even the stupidest and most absurdly obvious patent without risking a long and expensive court battle.
Of course no sane legal system would close a sourt just because someone's 'secret algorithm' might be mentioned.
Why is HFT legal but beating them at their own game is illegal? http://news.slashdot.org/story/10/10/15/0139217/Norwegian-Day-Traders-Convicted-For-Manipulating-Computer-Trading-System
Well, that's not true either.
The biggest problem with the "current clusterfuck" was not so much bad loans per se. Bad loans are and were not unexpected with the sort of lower-quality loans that were being made, even though the extent of the defaults has been unexpectedly high. A major problem that allowed this to spread from the sub-sector of the financial industry that deals with housing to the wider market was the financial engineering that was supposed to generate safe AAA assets out of a pool of crap, and the financial and non-financial institutions who stacked their balance sheets with this pseudo-AAA stuff with no back-up plans because, after all, 'it's top rated'. If it was just about a bunch of people who invested directly in a crappy market the problems would be restricted to those directly involved, and nobody would really care.
How can I make a car analogy? A crappy old used-car with obvious rust that makes a horrible rattling noise when you start it both is and isn't dangerous - it has obvious flaws, but because these flaws are obvious it is possible to give it a wide berth if you don't know what you are doing. A car that looks new and doesn't make any obvious nasty sounds but has a flawed brake design can be more dangerous because you can't see that it is a death trap until you either do an implausible amount of inspection or ... until someone dies.
Oh - and your blame for Fannie and Freddie fails to explain how there can also have been a housing bubble in the UK, where FNMC and FNMA don't operate and there is no UK equivalent. Possibly economics is more complicated that a simple morality tale? If we look at WHY there was such a large demand for AAA-rated USD assets we then get on to macroeconomics, behavioral psychology and regulatory matters.
I have an elegant explanation for the events of 2008, but it is too long to fit in a /. comment...
Your also forgetting that they have an interest in prosecuting without issues that could cause a verdict to be over turned.
With all the political fevoring out there and general distaste for wall-street right now, releasing this information or making this public could raise a number of legal and ethics challenges causing something to be overturned or vacated on appeal.
Suppose releasing this information caused a public outcry which tainted the jury or worse yet, caused protests on the court house steps that is later claimed to influence the trial disproportionately against the defense. The bottom line is that keeping it quiet, at least until the verdict is in, will avoid a lot of that. The constitution guarantees a fair trial, not having one is grounds for appeal, not being able to have one at all, can be grounds to avoid prosecution at all. It will make it extremely more difficult to get a conviction to stick if it's in the open before the trial is concluded.
Vast disparities in wealth are incompatible with democracy and civil society. You can't have either when one small group of people gets to play by a completely different set of rules than everyone else. Given that you, personally, are more likely to get hit by a meteor and then struck by lightning than you are to accumulate your own vast wealth, and given that you, personally, benefit immensely from living in a democratic civil society, you, personally, should be against vast disparities in wealth. This applies to the 99.99 percent of people who will never accumulate more than a million in assets in their lifetime. Why let that .01 percent make the rules? They are making the rules, but you are the majority, meaning, you are letting them make the rules. You don't have to let them do that.
- None can love freedom heartily, but good men; the rest love not freedom, but license. -- John Milton
It is about the fact that Goldman Sachs had, and continues to have, network taps that are closer to the exchange computers than anybody else. They have latency advantages of up to .2ms on trades, which is a gigantic window if they can cache other orders and jam theirs into the front.
Others have pointed out that Goldman Sachs record is statistically IMPOSSIBLE. See Seeking Alpha here:
http://seekingalpha.com/article/154083-goldman-is-its-trading-performance-statistically-reasonable?source=commenter
Also, the exchanges have seen rashes of NOP orders placed. Fake trades designed to jam the queues to create artificial windows of opportunity to front-run big market movements. Goldman Sachs is probably (fuck probably, they are certainly) gaming NBBO and pocketing the difference millions of times a day.
For the less market knowledgeable out there (basically, most of Slashdot), they are running the scam Richard Pryor did in Superman, or in Office Space. They are skimming pennies off the market by seeing a trade ahead of it hitting the exchange, then jamming NOP orders in while they calculate and move a trade ahead of that to piggyback on the effect of the larger trade on share price.
Denninger has been all over this story:
http://market-ticker.org/akcs-www?singlepost=2139302
Sergey's code probably contains stuff in it that jams NOP orders into the system, or shows how it using something simple like the dragon tools or plain ol' tcpdump to inspect orders as they fly-by on the tap. In fact, Sergey's code may PROVE beyond a reasonable doubt that Goldman Sachs is tapping the NYSE Exchange computers ethernet feeds. That would be a bombshell of the first order.
Like I said, look beyond the technical press and look at the financial press. Goldman Sachs is coming to the poker table with a marked deck and it can be statistically proven.
HFT is a smoke screen. The frequency of trading is moot. if I can look at the world's trades before they hit the exchange and process and effect NBBO, I now have a license to print money. Doing it high frequency just makes the printing press run faster.
Perhaps because the last few times we've seen political action to enforce a relative parity of wealth, we've seen Russia and China
Hint, Russia and China are doing it wrong. Hell, their income inequality is barely any better than ours. Fact is you can lower income inequality through policy without becoming a totalitarian hell hole. Look at central Europe.
Give me Classic Slashdot or give me death!
Perhaps because the last few times we've seen political action to enforce a relative parity of wealth, we've seen Russia and China become places that nearly no American would want to live.
Or if you were concerned for honest and accurate discussion rather than panty twisting fear mongering, you might have pointed out America's recent much higher marginal tax rate which created the America of a large middle class which most people today see as what America is.
Because, you know, there is a vast range of middle ground between the far fringe right of totalitarian rule by the elite where we are now and the far fringe left of Stalinism.. The chunk in the middle of that space is known as "Liberalism' or "the fundamental basis of America".
So, no you're pretty much as wrong as it's possible to be. A few attempts at enforcing a relative parity of wealth went overboard. Most work well and create far superior societies than those of either extreme and we have the examples from our own country to point to to demonstrate that point absolutely.
Thanks for playing though. If this were "spout crazy blatantly false reactionary nonsense" you would have done well.
It's not though, it's we the decent people of this country are sick of you idiotic extremist wack jobs spouting idiotic bullshit that weakens the entire country for the benefit of a few sick fucks.
You don't think they deserve due process? You don't think any of them might have legitimately acquired their wealth?
This is the core reason why nothing will change in this country. If everyone thinks they will get to the top, nobody will want to put any effort into changing the system. We have a majority of the population that is jumping up and down for some of the table scraps, but they will never, ever become part of the stupid-elite. The fact that so many people are delusional enough to assume that money equals happiness proves that we have to many people that have their priorities mixed up. Money isnt going to fix your life its only going to complicate the many problems you already have that you are not dealing with on a personal level and those problems will be transferred to innocent people because you have money and dont know how to use it. I dont hate you for it. I feel sad for you wasting your life for something that matters little in the grand scheme of things. :(
Vast disparities in wealth are incompatible with democracy and civil society. You can't have either when one small group of people gets to play by a completely different set of rules than everyone else. Given that you, personally, are more likely to get hit by a meteor and then struck by lightning than you are to accumulate your own vast wealth, and given that you, personally, benefit immensely from living in a democratic civil society, you, personally, should be against vast disparities in wealth. This applies to the 99.99 percent of people who will never accumulate more than a million in assets in their lifetime. Why let that .01 percent make the rules? They are making the rules, but you are the majority, meaning, you are letting them make the rules. You don't have to let them do that.
Most people who accumulate a million bucks are fairly ordinary, not the type you tend to hear about on television. Middle aged people who've worked their whole lives and spent frugally.
You're right that people ought to be under the same law, but what makes you think some people are above the law? We regularly hear about CEOs and other types who end up in jail. Apparently really nice jails, but jails nonetheless. Sure, money makes some people more powerful than others, but mostly you have to stay within the law to make a bunch of money.
The real danger is that by trying to right the wrongs, you create a socialist dystopia that's meant to be fair, but isn't. Hand out welfare payments meant for people who can't find a job, and find that suddenly the working poor are worse off than the nonworking. You also end up relying on the state to plan everything, make every decision. Guess what, people who work for the government are fallible too.
Neither Russia nor China had any interest in enforcing a relative parity of wealth. This is absurdly obvious with even a cursory look at rich party members vs. the average person. But of course, both Russia and China are trotted out by the existing ruling class to scare the masses against change.
Mind you, I am vehemently opposed to forcing wealth parity. Achievement and accompanying reward must be driven by an individual's own merits and drive, and nothing more. I do realize that sadly, in today's society, that's just as much of a fantasy as a free market, or forced wealth parity, but I digress. :p
Socialism does not necessarily involve gulags and show trials, in the UK we managed to introduce a national health service, state pensions and so on without recourse to violence, because the vast majority of people agreed with them.
To have a right to do a thing is not at all the same as to be right in doing it
I keep about $500 in checking to pay bills. The rest of the cash is in my home, which when the whole freaking thing ends up collapsing, I will have access to my money
What makes you think your money will be worth anything if everything collapses?
To have a right to do a thing is not at all the same as to be right in doing it