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Former Goldman Programmer Sentenced To 97 Months

Posted by timothy on from the hey-97-is-prime dept.

stevegee58 writes "Former Goldman Sachs programmer Sergey Aleynikov was sentenced to 97 months in prison for stealing source code used in Goldman's high-frequency trading algorithms. Aleynikov was convicted late last year in Manhattan federal court."

12 of 195 comments (clear)

  1. Shame by Anonymous Coward · · Score: 5, Insightful

    It's a shame this is the only guy from GS who went to jail...

  2. Those who should get 97 months... by dargaud · · Score: 5, Insightful

    ...are those who USE this algorithm.

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    1. Re:Those who should get 97 months... by yorugua · · Score: 4, Interesting

      You mean to do this: http://www.cpeterson.org/2011/03/10/why-gas-is-so-expensive-today-hint-its-not-libya/

      from TFA:

      in 1991, J. Aron—the Goldman subsidiary—wrote to the Commodity Futures Trading Commission (the government agency overseeing this market) and asked for one measly exception to the rules.

      The whole definition of physical hedgers was needlessly restrictive, J. Aron argued. Sure, a corn farmer who bought futures contracts to hedge the risk of a glut in corn prices had a legitimate reason to be hedging his bets. After all, being a farmer was risky! Anything could happen to a farmer, what with nature being involved and all!

      Everyone who grew any kind of crop was taking a risk, and it was only right and natural that the government should allow these good people to buy futures contracts to offset that risk.

      But what about people on Wall Street? Were not they, too, like farmers, in the sense that they were taking a risk, exposing themselves to the whims of economic nature? After all, a speculator who bought up corn also had risk—investment risk. So, Goldman’s subsidiary argued, why not allow the poor speculator to escape those cruel position limits and be allowed to make transactions in unlimited amounts? Why even call him a speculator at all? Couldn’t J. Aron call itself a physical hedger too? After all, it was taking real risk—just like a farmer!

      On October 18, 1991, the CFTC-in the person of Laurie Ferber, an appointee of the first President Bush—agreed with J. Aron’s letter. Ferber wrote that she understood that Aron was asking that its speculative activity be recognized as “bona fide hedging”—and, after a lot of jargon and legalese, she accepted that argument. This was the beginning of the end for position limits and for the proper balance between physical hedgers and speculators in the energy markets.

      To look at this another way—just to make it easy—let’s create something we call the McDonaldland Menu Index (MMI). The MMI is based upon the price of eleven McDonald’s products, including the Big Mac, the Quarter Pounder, the shake, fries, and hash browns. Let’s say the total price of those eleven products on November l, 2010, is $37.90. Now let’s say you bet $1,000 on the McDonaldland Menu Index on that date, November 1. A month later, the total price of those eleven products is now $39.72.

      Well, gosh, that’s a 4.8 percent price increase. Since you put $1,000 into the MMI on November 1, on December 1 you’ve now got $1,048. A smart investment!

      Just to be clear—you didn’t actually buy $1,000 worth of Big Macs and fries and shakes. All you did is bet $1,000 on the prices of Big Macs and fries and shakes.

      But here’s the thing: if you were just some schmuck on the street and you wanted to gamble on this nonsense, you couldn’t do it, because your behavior would be speculative and restricted under that old 1936 Commodity Exchange Act, which supposedly maintained that delicate balance between speculator and physical hedger (i.e., the real producers/consumers). Same goes for a giant pension fund or a trust that didn’t have one of those magic letters. Even if you wanted into this craziness, you couldn’t get in, because it was barred to the Common Speculator. The only way for you to get to the gaming table was, in essence, to rent the speculator-hedger exemption that the government had quietly given to companies like Goldman Sachs via those sixteen letters.

  3. This would make sense... by MickyTheIdiot · · Score: 5, Insightful

    ...if all the top Goldman CEOs were put in jail for 8 years for their stunts that put the country into a major recession.

  4. Stool Pidgeon by cosm · · Score: 4, Insightful

    How many Goldman employees went to jail for stealing taxpayer dollars?

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    1. Re:Stool Pidgeon by countertrolling · · Score: 5, Funny

      Well, if you consider a cabinet position to be like prison, quite a few

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  5. A little crazy... by SomePgmr · · Score: 4, Interesting

    Pushing the code off to a free hosting service is highly questionable, even if he claims he meant to be moving OSS and screwed up. But wow... 97 months for "interstate transportation of stolen property"? If it's still the case that he didn't use or distribute that source, and even cooperated all along... that seems awfully harsh.

  6. any goldman sachs excutives going to jail by Dan667 · · Score: 4, Insightful

    for any of their abuses?

  7. Now now by Moraelin · · Score: 4, Insightful

    Now now... I know those guys are hated, and caused a global recession to line their pockets, and were giving themselves gigantic bonuses just as they were being bailed out by the government, and all, but that's no excuse to go back to barbaric times. Two wrongs don't make a right, ok? There's no reason to deprive the people of football for that.

    Do what the Romans used to: have the executions at halftime :p

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  8. GS is a big donor to the right people by unassimilatible · · Score: 4, Informative

    A million dollars buys you a lot.

    Barack Obama (D)
    Top Contributors

    University of California $1,591,395
    Goldman Sachs $994,795
    Harvard University $854,747
    Microsoft Corp $833,617
    Google Inc $803,436
    Citigroup Inc $701,290
    JPMorgan Chase & Co $695,132
    Time Warner $590,084
    Sidley Austin LLP $588,598
    Stanford University $586,557
    National Amusements Inc $551,683
    UBS AG $543,219
    Wilmerhale Llp $542,618
    Skadden, Arps et al $530,839
    IBM Corp $528,822
    Columbia University $528,302
    Morgan Stanley $514,881
    General Electric $499,130

    http://www.opensecrets.org/pres08/contrib.php?cycle=2008&cid=N00009638

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    1. Re:GS is a big donor to the right people by Grismar · · Score: 4, Insightful

      Don't get me wrong, I'm not so naïve to believe US politics (or any Western country's politics for that matter) are free of corruption. But you're right there on the other end of the spectrum: making everyone supporting a political cause with money suspect.

      If you think that's somehow helpful, power to you, but I don't see how it is. Of course you could be of the opinion that supporting a political cause with money is a bad thing for exactly that reason, but believing that would stop everyone from doing it would be no less naïve...

  9. Well, Obama did hire Goldman's top lobbyist by unassimilatible · · Score: 5, Interesting

    As his Treasury Secretary's chief of staff. How's that for influence? And GE's CEO is on his economic team.

    Question for you: If money doesn't buy influence, why do companies donate to candidates? And don't say because they are true believers - most donate to both sides.

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