In Second Trial, Ex-Goldman Sachs Programmer Convicted of Code Theft

Ars Technica reports that A former Goldman Sachs programmer—featured in the book Flash Boys—was convicted on Friday for stealing high-speed trading code from the bank. Sergey Aleynikov, 45, was also acquitted on one count of unlawful duplication, according to Reuters. The New York state jury could not come to a verdict on another count of unlawful use of secret scientific material. Sergey Aleynikov was also acquitted of unlawful duplication. This was the second trial for Aleynikov in five years. He could face up to four years in prison.

Comments

Unlawful duplication

[HairyNevus]

Sergey Aleynikov, 45, was also acquitted on one count of unlawful duplication, according to Reuters. [...]. Sergey Aleynikov was also acquitted of unlawful duplication.

Meanwhile, timothy is still at large....

'Stealing'

[Anonymous Coward]

Stealing? So he REMOVED it from them with intent to deny them the use of it? Surely you mean copying? "Unlawful use of secret scientific material." wow, America is full of comedy laws.

Goldman Sacs secret sauce is that when it can't sell bad assets, the ex Goldman Sacs execs in Federal Reserve banks, print money to bail it out. Setting up shell companies that buy the bankrupt assets at high value prices, lending those shell companies printed money, then closing *those* shell companies as bankrupt slowly over time and putting that on the banks books as a loss. Basically handing wealth from real dollar asset companies to Goldmans. Stock trading by its nature is a zero sum game and can't generate wealth without this kind of trickery.

NOW THAT *IS* STEALING. Because it takes wealth away from dollar savers and gives the underlying value to Goldman Sachs.

Re:It's not really about the code...

[randalware]

lets stop high frequency trading.

stock investments that are fleeting, are not investments only gambling.

People hold investments for days,weeks,months, years.

Gamblers change their mind moment to moment.

Speculators & gamblers gaming our financial systems are making a mess of the world.

This includes the US government and the printing of money without any backing value.

The doom and gloom market boys are predicting a real mess if our leadership doesn't make a real change in regard to our debit & deficit.

got your gold, guns, ammo & prepper supplies ?

Re:give it up

[Greyfox]

I ran across a great quote the other day.

How it works

[Required Snark]

Wall Street gets to steal from everybody.

Nobody gets to steal from Wall Street

Re:How it works

[Beeftopia]

That's why Aleynikov has been hounded for the past several years and no banking executives have been criminally prosecuted for their role in causing the biggest financial disaster since the Great Depression.

That's why a single trader is being held for causing the flash crash, doing things that the big companies do, but making the mistake of not having political connections.

This is not about fair market competition. This is about winning at all costs, with the referees (politicians) are paid off by the wealthy players.

Double jeopardy ?

[Saffaya]

Isn't there a law that forbids being trialed more than once for the same events ?

https://en.wikipedia.org/wiki/...

Would someone be informative enough to explain why he couldn't benefit from it ?

Re:Double jeopardy ?

[stephanruby]

Isn't there a law that forbids being trialed more than once for the same events ?

Yes, there is. In fact, his lawyer is going to appeal invoking double jeopardy.

That being said, it looks like that law may not favor him because:

Once again, however, the law is not as simple as it first appears because the statute has an important exception if the earlier case was “terminated by a court order expressly founded upon insufficiency of evidence to establish some element of such offense which is not an element of the other offense, defined by the laws of this state.” Roughly translated, that means Mr. Aleynikov probably can be prosecuted again because the federal case focused on tangible property, while the New York charges cover computer programs.

There is a good chance the latest charges will move forward, which makes Mr. Aleynikov’s demand that Goldman pay his legal fees all the more important because the earlier case essentially bankrupted him. According to a complaint filed in the United States District Court in New Jersey, he claims that the legal fees for the federal case were approximately $2.4 million, and the state case is likely to run up a similar bill.

source

By the way, here is another weird tidbit about the case:

It seems a bit odd that someone accused of stealing from his employer can demand that it pay for his lawyer, but that is how the law operates for public companies like Goldman that agree to indemnify their employees for legal fees and make advance payments of those costs.

Goldman’s bylaws require it to indemnify an officer for all costs in any proceeding, including a criminal prosecution. As a vice president at Goldman, Mr. Aleynikov appears to come within the scope of the bylaws that entitle him to seek payment of his fees.

The bylaws commit Goldman to pay Mr. Aleynikov’s fees in advance of a resolution of the case as long as he agrees to repay the money if it is determined he is not entitled to it, which he has done.

Fabrice Tourre, who is on leave as a vice president, is having many of his legal expenses covered by Goldman as he faces a securities fraud lawsuit by the Securities and Exchange Commission. Goldman also paid a portion of the legal fees of its former director, Rajat Gupta, to defend him against insider trading charges, even though he was accused (and later convicted) of passing confidential information received from the firm.

Even better for Mr. Aleynikov is a provision of Delaware law, the state in which Goldman is incorporated, that requires a company to pay the legal fees of an officer who “has been successful on the merits or otherwise in defense of any action, suit or proceeding.”

When the appeals court reversed the conviction and ordered a dismissal of the charges, he was successful, even though the court also noted at one point that “Aleynikov stole purely intangible property embodied in a purely intangible format.”

That does not mean Goldman will pay the $2.4 million or advance additional money anytime soon, however. Companies loathe this type of claim because it makes them responsible for costs when they consider themselves the victim of a crime, and so there is an incentive to litigate the claim. Given Mr. Aleynikov’s dire financial condition, the firm could try to stall the case in the hope that he will settle for a smaller payment.

source

Re:give it up

[Paradise Pete]

Why the desperation to declare that infringement == stealing? The only reason I can see is to invoke the connotation that stealing has. "Infringement" doesn't sound strong enough, so you want to call it something that does.
You're playing word games. "Theft of service" has a specific meaning, in much the same way that infringement does. But you want snip out the "theft" part and treat as a stand-alone word, so that you can then equate it to stealing. Then you want to tie that back to infringement.. It's a parlor game. Start with any word, then take a reasonable synonym for it. Now find a synonym for the new word. Continue to repeat this game and you can "prove" that black is white.

Re:It's not really about the code...

[MillionthMonkey]

I used to work at a large company that specialized in "e-trading". They paid a fee for access to second order quotes, which meant that they knew about not just the current price of a security, but the actual stream of bid and ask prices from individual investors. If you have access to the stream, you can just write code that slightly underbids and offers slightly overpriced shares, so you get to nickel and dime investors all day with sub-millisecond accuracy. It was basically software that stole money from everyone all day.

Re:It's not really about the code...

[pitchpipe]

I think this verdict sends a great message: do not steal from the leaches of society that have enough money to get other leaches elected.

Re:give it up

[ultranova]

Stealing/theft is a word with multiple meanings. This is one of them.

Theft is a word with a single meaning which various business interests like to use in cases which don't involve it to set up an appeal to emotion. Such attempts should be resisted, not excused.

Re:It's not really about the code...

[dcollins117]

I think this verdict sends a great message: do not steal from the leaches of society that have enough money to get other leaches elected.

From the comments on this article I get the feeling I'm the only one would read Flash boys. He was developing code, part of it proprietary and part of it open source, which he modified. His intent was to someday separate and release the modified open source code; he didn't have any plans to do anything with the proprietary code. He checked the code into a subversion repository based in Germany, apparently the first free code repository his search engine ranked.

So when the police got hold of this, they heard subversion" repository and concluded obviously this guy is a "subversive". Oh, it's hosted in Germany? Even worse.

When they investigated further, they made a big deal out of the fact that he deleted his bash history. What's he trying to hide? Sounds like a cover up.

That's the level of stupidity and ignorance and we've come to expect of police regarding technical matters. And for what it's worth, I use subversion, (or cvs, git, whatever the project uses) and my .bash_history links to /dev/null. I don't use the feature, so I don't waste the disk space. I guess that makes me a criminal.

Goldman Sachs and possible GPL Violations?

[DougPaulson]

What stealing, he took copies of Open Source he had incorporated into the app while he was employed at Goldman Sachs. By rights Goldman Sachs should be charged with possible GPL Violations.

"Serge quickly discovered, to his surprise, that Goldman had a one-way relationship with open source. They took huge amounts of free software off the Web, but they did not return it after he had modified it, even when his modifications were very slight and of general rather than financial use." ref

Lawyer for Ex-Goldman Programmer Criticizes Prosecutors and Firm

Re:Goldman Sachs and possible GPL Violations?

[timmyf2371]

Considering the guy has been convicted of "unlawful duplication", it sounds like Goldman Sachs did not distribute the software in question. They are therefore entitled to incorporate GPL'd code into their software without making the rest of their code public.

Re:Goldman Sachs and possible GPL Violations?

[martin-boundary]

It's not stealing [ethically]. It's exactly what the GPL intends.

Goldman in this case are an end-user. As an end-user, they have certain rights to run the code, and modify it as they wish for their own purposes.

The GPL philosophy has always been to skew the copy rights towards users and away from distributors. If you're purely a user, there are practically no restrictions for you. If you're also a distributor, then some restrictions apply to you.

Re:It's not really about the code...

[bkmoore]

Now, if i could write a software, that took 1 cent of each transaction and put it on my back account...

You mean fractions of a cent, kinda like in Superman 3.

Re:It's not really about the code...

[martin-boundary]

From your comment, I get the feeling you read Flashboys *uncritically*, though.

Open source isn't the issue. The issue is that, as a programmer for hire, the code he produced during his employment period was not under his own copyright. Any working computer programmer knows this, or if not, should.

He had no right to copy the code he wrote, submit patches, or otherwise contribute back to any open source projects. He needed permission from the company's officers to do any of this.

In particular, he probably even broke the open source licenses for the free software he used. For example, the GPL makes it clear that if you patch the software publicly, you *must* have the right to do so. He clearly had no such right.

All open source projects have licenses. All closed source projects have licenses. Just because you can download some source files or some binaries from somewhere, and someone says it's ok to use it, or you think someone said to someone else it's ok to use it, doesn't make it so.

When you're a programmer for hire, you have no rights to your own code. You're there to write it for the company. It's the company's code. It's their property, and their decision, if it gets shared to anyone. It's also their decision if you can use any software inhouse. And it's their decision if they want to abide by any license terms or not.

You're just a codemonkey.(*)

(*) for most values of "you" where "you" is not a company officer.

Re:It's not really about the code...

[Applehu Akbar]

If Goldman Sachs were gambling, that wouldn't be so bad. They could and often do lose. What high-frequency trading is all about is arbitrage, buying low in one market and simultaneously selling higher in another. Traditional arbitrage is basically a good thing: it's the natural mechanism by which prices in two widely separated trading markets are pulled into line. HFT is arbitraging the tiny price differentials that develop in close-by markets when any small differential between the price of a Microsoft share on one exchange vs. the price on another exchange. The moral problem with HFT is that it is a totally nonproductive financial activity. No industries are being evaluated, no company finances are being vetted and no investments are being made, while a great deal of computer power is getting wasted trying to find infinitesimally faster ways of comparing prices in different markets.

Re:give it up

[unrtst]

For those not wanting to watch a video to read a quote:

Thomas Jefferson (to Isaac McPherson, 1813-08-13):

If nature has made any one thing less susceptible than all others of exclusive property, it is the action of the thinking power called an idea, which an individual may exclusively possess as long as he keeps it to himself; but the moment it is divulged, it forces itself into the possession of every one, and the receiver cannot dispossess himself of it. Its peculiar character, too, is that no one possesses the less, because every other possesses the whole of it. He who receives an idea from me, receives instruction himself without lessening mine; as he who lights his taper at mine, receives light without darkening me.

Full text is easy to find via your favorite search engine.