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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
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
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.
Courtrooms have been closed several times before to protect trade secrets. The Supreme Court case Ruckelshaus v. Monsanto opinion points out that once secrecy is lost, the property interest is forever destroyed and that it should be protected during the process. There are many other ways to preserve secrecy so closing the courtroom may not be necessary in all cases but that may be the only way to protect the trade secret in this situation.
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.
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