Conviction of Ex-Goldman Programmer Overturned

Once in a while, the system works.

It was stunning that Goldman was able to get its former employee Sergey Aleynikov arrested, and then convicted, for allegedly stealing computer code (“allegedly” is the right word, since the lower court verdict is now officially an acquittal). The fact that the securities firm could sic the FBI on the case in such short order seemed proof of the strongest form of “Government Sachs” conspiracy theories.

The idea that an intellectual property violation against a private was taken up by a prosecutor, the Manhattan US Attorney, looked like a perverse extension of the “corporations are people” view of the world. Goldman is a very profitable firm with numerous lines of business. The idea that loss of IP in one business could constitute serious harm to the firm seems quite a stretch, particularly in the area in which Aleynikov worked, high frequency trading. I’d imagine that any strategies in that arena have a very short shelf life, and thus whatever damage might have been done would have been of limited duration.

But the critical bit is the criminal versus civil distinction. While it was most decidedly not cool that Aleynikov made off with Goldman code, one has to question why taxpayer-funded prosecutors and prisons are being used to enforce less than crystal clear rights (“trade secrets” are far less clearly defined than copyright or patents).

The three judge appeals court panel not only took the unusual step of issuing its decision mere hours after the hearing (ruling to follow), but also by reversing the lower court decision, appears to have barred an appeal (note the report at Bloomberg suggests an appeal may still be possible).

The two charges in the criminal case were economic espionage and transportation of stolen property across state lines. This is the Wikipedia summary of the Economic Espionage Act:

This law contains two sections criminalizing two sorts of activity. The first, 18 U.S.C. § 1831(a), criminalizes the misappropriation of trade secrets (including conspiracy to misappropriate trade secrets and the subsequent acquisition of such misappropriated trade secrets) with the knowledge or intent that the theft will benefit a foreign power. Penalties for violation are fines of up to US$500,000 per offense and imprisonment of up to 15 years for individuals, and fines of up to US$10 million for organizations,

The second section, 18 U.S.C. § 1832, criminalizes the misappropriation of trade secrets related to or included in a product that is produced for or placed in interstate (including international) commerce, with the knowledge or intent that the misappropriation will injure the owner of the trade secret. Penalties for violation of section 1832 are imprisonment for up to 10 years for individuals (no fines) and fines of up to US$5 million for organizations.

Superficially, this law looks heinous, but actually, there are a number of hurdles that must be overcome, and the defense argued (and the judges apparently agreed) that the lower court judge had strained to apply the espionage law to this case. First, it is hard to prove that a business practice rises to the level of a trade secret. My former client, O’Connor & Associates, won a suit against a former employee who set up a software company and claimed to have software that sounded identical to O’Connor code. They considered it a coup to have persuaded the court that their software was indeed a trade secret (and O’Connor did statistical arbitrage, which like HFT was a high-speed, low profit per trade strategy). O’Connor believed that part of its success in getting the court to agree that its code was indeed a trade secret was the lengths to which it went to limit access to it, including restricting employee access to various areas of the firm (O’Connor had the firm subdivided into many small sections, with each employee’s access card limiting him to “need to be there” areas of the firm). Second, the appropriation of the IP has to take place “with the knowledge or intent” that it will either help a foreign power (section 1) or hurt the owner of the trade secret as a result of being produced for or placed in interstate/international commerce.

Per Bloomberg:

During oral arguments yesterday, the three-judge appeals panel criticized the government’s application of the espionage act to Aleynikov’s actions, asking the prosecutor how the crime occurred and how it affected commerce.

The judges — Dennis Jacobs, 67, Guido Calabresi, 79, and Rosemary Pooler, 73 — also asked if taking Goldman Sachs’s trading code was comparable to taking copyrighted material or bringing an employee manual to a new job.

[Defense attorney Kevin] Marino argued that the trial judge had “bent over backward” to let the government apply the espionage statute and argued the case should have been prosecuted in state court.

Marino argued, as he had during the trial, that Aleynikov only took open-source code he had written at Goldman Sachs. He said the government had tried to expand its reading of the Economic Espionage Act to encompass that.

“There is no trade secret,” Marino told the court. “He took it to make his new job easier, he never intended to harm Goldman.”

And this comment from the New York Times:

The reversal deals a major blow to the Justice Department, which has made the prosecution of high-tech crime and intellectual property theft a top priority. This case tested the boundaries of the Economic Espionage Act, a 15-year-old law that makes it a crime to steal trade secrets. Federal prosecutors held up the arrest of Mr. Aleynikov as an example of the government’s crackdown on employees who steal valuable and proprietary information from their employers..

A crucial issue in the appeal — and a main focus of Thursday’s oral argument — was whether Mr. Aleynikov’s actions constituted a crime under the statutory language of the Economic Espionage Act. The debate centered on whether Goldman’s high frequency trading system was a “product produced for interstate commerce” within the meaning of the law.

Lawyers for Mr. Aleynikov argued that the bank’s trading platform was built for internal use and never placed in the stream of commerce. The government countered that the high-frequency trading system, which Goldman used to trade in markets around the globe, was clearly produced for interstate and foreign commerce.

I am looking forward to reading the ruling.

Print Friendly, PDF & Email


  1. Mogden

    Naturally, when the weighty hand of the Federal executive intervenes in a Goldman-related court case, it is on the side of Goldman.

    No matter how cynical I become, there are further depths to which reality may bring me down.

    1. Mark P.

      Oh, there are further depths yet.

      I’m surprised that Aleynikov was released, given that through most of 2009 the U.S. largely had a Potemkin stock market propped up by the proprietary HFT trading desks like Goldman’s Sigma X, where Aleynikov worked.

      The Obama administration was apparently fine with this arrangement — complicitous is another word, as this was market manipulation on a massive scale — because it propped up both the stock market and the big existing financial players. Typically, that those HFT trading desks at the TBTFs by definition fed on the pension funds, mom-and-pop investors and real traders seems to have bothered the administration not one whit.

      Point is, Aleynikov must know quite a bit about this.

  2. readerOfTeaLeaves

    I haven’t followed the case, but found myself dumbfounded by the Bloomberg report (in the SF Chronicle).

    I agree that it’s disgusting for the Feds to act as Goldman’s enforcers.
    However, the programmer apparently circumvented Goldman’s security procedures; sleazy, to say the least of it.
    In addition, how on earth is HFT not intended for interstate commerce?! If the code was ‘only internal’ to Goldman, then WTF was the point of sending it across server networks? This just doesn’t make sense.

    I also find it more than a little intriguing to note the ages of the three judges — are those age figures accurate…?! Because if they are using publishing-copyright analogy, I think they’re missing some key bits in the muddle.

    There are levels to this story that strike me as seriously weird.
    I don’t have an iota of sympathy for Goldman, but if its true the programmer copied files, circumvented security processes, and then claimed it was all about Open Source software — that’s bullshit.

    I can go online and get Open Source software any instant; I wouldn’t have to copy an employer’s code without asking, and be sneaky about it.

    The point of Open Source is to share and copy freely.
    That’s not what happened here.

    This doesn’t pass my smell test.

    1. psychohistorian

      I think what is at question here is the extension of Open Source code. I expect folks are hacking the heck out of Apache and some of the parts are gnarly enough that you want the source code for the next Apache hack job someone asks you to do.

      The attorneys can argue themselves silly over where the extension of the Open Source code became proprietary.

    2. Yves Smith Post author

      You need to read the statue! You can sue sleaze into the ground under civil statutes. You seem to be forgetting than Angelo Mozilo and plenty of other big dudes who profited from wrecking the economy have not been prosecuted, let alone convicted. So the message here is that “crimes” against banks are taken much more seriously than “crimes” committed by banks.

      I will defer to lawyers, but I believe you are also wrong in your interstate commerce argument. This is not about your understanding of what “commerce” is but what it is taken to mean in statute and case law. I believe the judges are correct, the definition of “interstate commerce” under the law is goods and services being traded with THIRD PARTIES. Acting as an arbitrageur or a prop trader, which is the best analogy to HFT, may not fall within this notion of “commerce”.

      The statute not ONLY requires that it be interstate commerce, but that it be a “trade secret” AND that the person taking it have knowledge or intent that he was going to do harm. Was his new firm a serious competitor to Goldman? I kinda doubt it. And as I suggested in the post, “trade secret” is a very high bar. Proprietary is not sufficient for something to be a trade secret.

      1. readerOfTeaLeaves

        You seem to be forgetting than Angelo Mozilo and plenty of other big dudes who profited from wrecking the economy have not been prosecuted, let alone convicted. So the message here is that “crimes” against banks are taken much more seriously than “crimes” committed by banks.</blockquote.
        Ah. Mozilo…
        Now that you've put it like that, I'm smacking my hand against my forehead and feeling more than simply silly.

        And as for the Interstate Commerce, and 'trade secrets' clauses, it would be interesting to know what the attys think of this decision.

        I follow every point you make, and concede that I really wasn't looking at the big picture at all. Why are crimes *against* the banks treated so much more ruthlessly than crimes BY the banks? Somehow, I doubt it’s because they’re ‘doing God’s work’. Ahem…

        1. readerOfTeaLeaves

          Meh! Bad blockquote tag before ‘Ah. Mozilo.’
          I do wish NC had a ‘edit’ features… sigh…

        2. F. Beard

          Why are crimes *against* the banks treated so much more ruthlessly than crimes BY the banks? readerOfTeaLeaves

          Because it was decided long ago that what banks do is legal though what they do is rooted in fraud and embezzlement and what they do steals purchasing power, particularly from the poor.

          But the main reason is that our entire economy is built on that crooked foundation and we mustn’t shake it too much, must we?

          1. Yves Smith Post author

            I’ve said I thought they used the wrong legal theory. I believe you could get all the big banksters with Sarbox, but the SEC has been afraid to go there. They don’t like perfecting new legal arguments (you typically lose a few before you start winning).



            And he was investigated but NOT prosecuted:


            The one suit against him was settled, for insider trading (brought by the SEC, which cannot bring criminal cases on its own. Not Sarbox gives you a direct path from a civil to a criminal prosecution).

      2. sgt_doom

        Brilliant! In one sentence, Ms. Smith sums it up perfectly:

        “So the message here is that “crimes” against banks are taken much more seriously than “crimes” committed by banks.”


    3. YankeeFrank

      Actually no, its not bullshit. Many software developers write libraries of code that are common and useful within many different environments. When developers write this code it may be applicable to work they perform at various entities, and in this case, much of the code likely either predated Aleynikov’s stint at Goldman, and/or was developed independently for his own use in this and other positions.

      Examples of code like this could be algorithms of commonly used pricing methods, or even more basic, useful date or money representations/manipulations that generic libraries do not handle accurately or are in other ways not appropriate to finance.

      One should really think of code writing in the same way a litigation attorney uses and maintains libraries of memoranda of law and case law analysis (that they take from job to job) — language and arguments that are particularly useful in many situations.

      There is very little copyrightable or patentable material in 99% or more of software code (which doesn’t mean companies don’t attempt and succeed at patenting code that really shouldn’t be).

      With regard to the open source bit, that is dependent only on what sort of licensing arrangement Aleynikov established the libraries under. Whether it was made available on a public source code repository is irrelevant to its licensing status.

      HFT code can contain all sorts of support code (as discussed above), as well as generic decision tree-type logic that would be customizable on-the-fly based on trader strategy changes on a day-to-day basis. Realistically, only the particularly configured strategies for the given day/week or whatever duration would be “unique” in any sense, and only truly unique when placed within the time context they are used by a particular trader or firm.

      The Goldman case was a ridiculous abuse of power, likely due to gross misunderstandings of computer software on the part of Goldman, and a justice dept. that is too eager to go on the offensive for a company like Goldman. Prosecutions like this will become more and more common as the government/finance nexus continues to solidify, and business-types continue to insist on ignorance of technology.

      1. readerOfTeaLeaves

        Interesting comment, and it all makes sense.
        Agree that 99% of the code probably should not be copyrightable, no matter what b.s. Goldman wants to pontificate about.

        But your point about the context of specific algos certainly synchs with what Mark P wrote above, in terms of all this HFT code creating a Potemkin market propping up the TBTF banks (and, I’d add, a number of federal agencies).

        Seems like we’re at an historical inflection point where the technologies and legal structures get more out of whack with each other by the week. No doubt the HFT is protected legally.

        And companies can be invasive about what’s ‘their’ code, as opposed to what’s yours. So the legal structures and power dynamics matter, and you make a good point that Goldman is claiming rights it has only because of existing, fraudulent structures. (No wonder it has to protect the HFT code that keeps the delusion operational enough for it to claim enough power to merit political and legal protection, eh?)

  3. LucyLulu

    I read the defense’s motion to dismiss the indictments at the lower court and got a few more details. First, Aleynikov signed strict confidentiality agreements upon employment and assigned all rights to any of his work over to GS. GS had paid $500 million in 1999 for the base program Aleynikov’s team used to make their modifications. This was certainly NOT open source software by any stretch of the imagination, nor was that argued during the motion to dismiss. He uploaded the code, 100’s of thousands of lines, to a remote server in Germany, deleting all the shell commands he used to execute the file transfers after he finished. He then went home and downloaded the code to his PC, a flash drive, along with some other computers. He would not have taken such great pains to hide his tracks if he didn’t know he was “stealing” the code. He then took his laptop and flash drive along on the interview with his future employer. I’m sure it was an excellent bargaining chip.

    Aleynikov argued that the code was not used in interstate commerce per the definition of a “product” in the common context found in product liability, where the trading platform would be required to be a commercial product that is manufactured, packaged, and sold across state lines. The Feds countered successfully with their own case precedents that were more on-point to the case at hand. The judge’s ruling on the indictment also looked to the original intent of the legislators who wrote the law(s) and concluded there was no intent to limit the scope of the definition of “product”, particularly because it was not designated as “consumer product” but only as a “product”.

    I’m looking forward to reading the appellate court’s decision myself, but my take is that the conviction was proper. It seems that Aleynikov was used to set the example though, the sentencing was certainly harsh. I don’t like GS anymore than anybody else here, maybe less, but based on the facts thus far, I also think Aleynikov committed theft and have just as little sympathy for him. GS invested large sums in terms of money, salaries, and time into their proprietary trading platform, and have a right to protect it from employees taking the software and selling it to a competitor.

    1. Yves Smith Post author


      You REALLY seem to miss the point. Violating confidentiality agreements or infringing on IP is not criminal. People steal my posts all the time, even scrape my entire site, which is stealing from me every bit as much as taking code from Goldman is. And I would further suggest that the damage to me of having my proprietary work product regularly stolen (just take any post headline ex Links in Google and see how many sites rip me off) is MORE significant relative to the size of my operation than the impact of this software expropriation could ever have been to Goldman.

      Yet I can’t get a prosecutor to throw people who steal my material in jail nor do I think that is an appropriate remedy. So why are you so insistent that this conduct, which strikes me as analogous, is criminal versus civil?

      The standard is that it has to be interstate commerce, it has to be a trade secret, and the person taking the IP has to have known he would cause harm or had the intent of causing harm. All three tests need to be met under the espionage statue, which seemed to be the bone of contention in the appeal.

      And the burden of proof is on the prosecution. You seem to forget that.

      Establishing intent (as defenders of the government’s failure to prosecute big banksters like to remind us) is VERY difficult. From what I can tell from the various news reports, the prosecution skipped this argument, and also appears not to have made much of a case re the software being a trade secret (and as I said above, it being proprietary or Goldman having spent a lot of money on it does NOT make it a trade secret).

      This is not about “he did something wrong.” This is about whether his conduct was criminal. From my reading of the statute, it wasn’t.

      1. H. Alexander Ivey

        Dang right! I fully agree with Smith.

        The system is broken, the “law” – the written word – is ignored by those with money and connections. Legal actions have become fedualism – personal loyalty, not loyalty to the law and common sense.

      2. TheHube

        >>The standard is that it has to be interstate commerce, it has to be a trade secret, and the person taking the IP has to have known he would cause harm or had the intent of causing harm. All three tests need to be met under the espionage statue, which seemed to be the bone of contention in the appeal.

        Rest assured, Goldman is busy having an alternative test written into the statute to make it easier the next time: “or, if Goldman requests that the person be prosecuted and convicted.”

      3. John Regan

        Yves, in my view you are 100% correct in your first sentence, and that should be enough to dispose of this case. Civil actions are more than adequate to address these kinds of wrongs, if indeed they are wrongs at all. Criminalizing them is simply a reflection of how much clout GS and other large financial institutions have with the feds. They get to use the feds as their toadies and threaten their employees with criminal prosecution if they displease them.

        It’s pretty disgusting, really.

        If you have a “disloyal employee” that steals your ideas/IP and lets a competitor use them, and that damages you, the damages should be readily ascertainable and both the employee and the competitor would be liable for them, and presumably would be good for them. Calling this kind of thing criminal is just in terrorem bullshit for fed favored institutions like GS and JPM.

    2. YankeeFrank

      Did Aleynikov admit that he had taken the proprietary Goldman code or is that just an unproven assertion? My understanding is Aleynikov claims the source code he took was open source licensed. Additionally, taking code for future reference is one thing, taking it for wholesale copying and reuse is another. As Yves states, they have to prove intent, and even then its not appropriate for the Justice Dept. to take this case as it is really a civil matter.

      Computer code is language, and very little of it is unique. Even assuming Aleynikov took code that had been licensed to Goldman, unless it had been used in a profit-making enterprise without appropriate re-licensing to the new customer, any damages are negligible to non-existant. To think that the only reason Aleynikov took such code to an interview on a flash drive was to steal the code and violate the license is an unproven assumption. FIrst of all, did he mention the code to the interviewer? Second of all, did he offer the code license free to them? And I’m just scratching the surface of unproven damages here.

      On a related note, what if Aleynikov had a very strong memory, or a photographic memory. If he then reused algorithms he had learned by reading the proprietary code would that be a violation? Remember that reading code is largely what programmers do (as much or more than they actually write in many cases). And would it be provable in any way? Perhaps if he just spewed the code out verbatim from memory and it very closely matched the original a case could be made for reuse. But even then, much code is just generic enough that a similarity argument could be made for much code that is licensed. It opens up a huge legal quagmire and borders on thought policing to enforce such legal “principles”. We really must think of computer code as language more than the way it seems to be considered — as scientific “discovery” of some kind. Do lawyers sue each other for stealing legal language and arguments from legal briefs?

      Back to the case in question — even if it had only been brought as a civil action for violation of license or trade secrets the battle would be an uphill climb. Unfortunately the trial judge in this case seemed intimidated or impressed by the Justice Dept and Goldman’s power and influence, and bent over backward to make their case stick. Its an abuse of the judiciary and all too common in this era of plutocrat-supporting judges and “justice”.

      1. Mark P.

        Aleynikov downloaded the code over the course of a month or so to a server in Germany.

        Also, his last couple of downloads was what set GS off after him. Indeed, they were actually fairly blatant, as I recall the accounts, almost as if Aleynikov wanted to let GS know in order to make a deal, thumb his nose or some such. Or maybe he was just clumsy. Who knows?

      2. LucyLulu

        As stated before, I am looking forward to reading the appellate court decision. We need more information. I love seeing GS lose this case, I believe they receive far too much deference. And absolutely, I wish they would prosecute the big banks crimes as vigorously as they prosecute those who commit offenses against the big banks. But if they don’t, that doesn’t mean other crimes, if committed, should go unpunished, IMO. And I’m not yet convinced that there wasn’t sufficient grounds for this case. We shall see.

        The reason the EEA was created was because the state laws were a hodge podge of inconsistent laws that mostly afforded companies no protection. The EEA allowed federal jurisdiction. We can argue if its a fair law or not, but its on the books, since 1997. I believe they had a good case for the software being used for interstate commerce which from what I understand was the bone of contention, not whether it was a “trade secret” or Aleynikov “caused harm” but I could be wrong. Even so, if GS was using software that they paid to develop, had strict security and confidentiality agreements in place to prevent others from obtaining, and allowed them a competitive advantage, that would qualify as a trade secret. If Aleynikov had written the software prior to becoming a GS employee rather than while they were paying him I would change my opinion but we don’t know that. I was also assuming that the code was supplied to the prospective employer for their use, thus affecting any advantage GS might enjoy, which perhaps was an invalid assumption. If I change employers and take a propriety database developed with several years of research and manpower that allowed my former employer a competitive advantage with me to my new employer, despite confidentiality agreements, they should have a cause of action. The EEA supplies the criminal element.

        Yes, I think the US went overboard in their pursuit. As stated, they were attempting to set an example, I believe this is one of the first prosecutions under the EEA. And yes, I’d love to see equally similar prosecutions of GS executives. I just happen to think that from what I’ve ascertained, Aleynikov’s behavior was morally reprehensible, and didn’t look like any good guy himself. He wasn’t any innocent homebuyer. That was my point, that two wrongs don’t make a right.

        1. Ramon Creager

          “The reason the EEA was created was because the state laws were a hodge podge of inconsistent laws that mostly afforded companies no protection.”

          You know this how? If one looks at laws passed in the last two decades, there is one overwhelming pattern: they were passed for (indeed largely written by) powerful interests seeking to cement their business model into law. Despite very real, even existential problems faced by the people of this nation, Congress’ continued attempts to address the concerns of the mighty and powerful continue to crop up unabated like kudzu, while the concerns of the majority fall into the realm of the “politically impracticable.” SOPA and PIPA are only the latest examples of this dynamic.

          Also, you continue to miss the point. The allegations made against Aleynikov don’t amount to a criminal case. Goldman are free to pursue him in civil court, and may indeed have a case. But it’s not a criminal one. The government’s unseemly zeal and eagerness to make a civil case into into a criminal one when some gnat bites a giant financial firm is as telling as their total lack of interest in pursuing real criminal cases (fraud and forgery on a massive scale) against the banks themselves. It’s clear who the government is serving.

    3. Dirk77

      May I make a technical point that has nothing to do with the criminal vs. civil argument that Yves has made. It is this: because of the viral nature of the GNU licensing agreement (GPL) one needs to very careful about calling any software proprietary.
      Goldman may have paid $500M for a piece of software but that doesn’t mean it was not open source to begin with. Or, it may have been modified with GPL software later which may have made the whole mess open source. Chances are that the Goldman people are smart enough to know this so if the code was indeed based upon GPL software those pieces were rewritten, preserving the underlying algorithm. But maybe they didn’t and Aleynikov was right.

    4. John Regan

      >>First, Aleynikov signed strict confidentiality agreements upon employment and assigned all rights to any of his work over to GS.<<

      Lucy, this is probably more a pet peeve of mine that anything really useful in the particular case, but nevertheless: what consideration did GS pay Aleynikov for that rather large concession? Typically, the answer is 0. Which would make the assignment invalid, if the law means anything, which it usually doesn't.

    1. Government Op

      Plenty of proprietary code there too, this is the best way to screw people, commit fraud, and so on. Additionally, it obliterates so-called contracts. But since we are still a child like nation, with child like “justice” and “lawyers”,
      Banksters don’t have to show their processing, underwriting, business code to any court. For certainly we would see dead bodies there. Out of sight, out of mind. Software patents are crooks best friends. See? Webber doesn’t steal from us when we post here, it’s all in the fine print.

  4. Francis Gertrued

    Imagine some principled hacker releasing the source code for a blood stained tool, namely MERS. You don’t think the FBI would send goons afer him?

    1. Lambert Strether

      More to the point, some cube-dwelling whisteblower who want to make a few million, and is comfortable staying away from small planes, and checks in regularly with his lawyer, who also has the safety box with the USB drive in it…

  5. Tom Crowl

    How about we make a compromise and throw all connected with High Frequency Trading in jail… or at the least sue them civilly and claw back every dime made!


    I’m convinced that eventually it will be proven mathematically but it may be too late for this very screwed up global financial system…

    Financial black swans driven by ultrafast machine ecology

    discussing: “the systemic risk developing in any complex socio-technical system that attempts to operate at, or beyond, the limits of human response times.”

  6. problem is

    Ah yes, Goldman takes full advantage of Corporate Owned Governance and orders the FBI and DOJ to immediately arrest Sergey Aleynikov for making off with their prized and valuable front running HFT code.

    If I had called with the same complaint, I might have heard back from the FBI and DOJ in a calendar year or two. Or maybe sooner when they decided to prosecute me for having HFT front running code in the first place.

    There needs to be prosecutions alright… but it ain’t Sergey. Get my drift, there Lloyd Blankfraud…

  7. Siggy

    I think the Russian stole proprietary code.

    I think the Justice Dept failed in its prosecution.

    HFT trading, CDS and similar derrivatives are unnecessary artifacts having no social value.

    It would be very helpful to know exactly what the code accomplished when implemented. There is this business of flash trading, presenting bids and offers that have a life of three nano seconds. Those little beauties effectively read the electronic book. Reading the book is cheating in order to trade to the detriment of any counterparty.

    Russian goes free, gotta love this country. GS stalled the use of its code and is now exiting the HFT space, good riddance.

    Would that we had as much prosecutorial zeal over the folks that orginated subprime and packaged it and traunched it.

  8. BondsOfSteel

    IMHO, either this guy got off easy, or he’s not a very good programmer.

    I’ve been a programmer for over 20 years… worked on many, many projects, and lead teams of programmers. I wouldn’t be surprized if every single person reading this has run my code.

    It’s possiable that this code was just a collection of base classes or custom collection classes that he was using that he was planning on making open source, or was derived from an open source. It’s common for people to want to use their own version of cstring, or creating their own templated map.

    It’s always a bad idea. They’ll argue for hours about how their weird implementation saves a byte or instruction or two. They miss that cstring has been used a billion times and has no known bugs.

    It’s a hard conversation to tell your VP that you or your team introduced a bug that cost the company a couple million bucks. Imagine if that bug is in a custom version of cstring. It’s defensible to introduce a bug… it happens… but not in a custom class where there are bug free subsitutes.

    It’s possiable that the code is for a more complex open source project. As an engineering manager, I never would have let someone work on an open source project from work unless if was on the up and up. The team would have published it… and it would be accrediated to the company.

    Taking code from work is stealing. It’s stealing from your company… and it’s stealing from your co-workers.

    1. Alleged Drunkard

      Wow, smells facist. Good thing our shop shares all of it, as the license specifies. Speaking of copyleft, here’s Stallman on Jobs:

      “Steve Jobs, the pioneer of the computer as a jail made cool, designed to sever fools from their freedom, has died.”

      1. Dirk77

        Personally, I can’t wait for the fad of free software and “information should be free” to get thrown into the dustbin on top of shareholder value, and economic growth. People should get paid for the work they do and people should pay for the work others. “Ultimately, the person who pays for something controls it”, which these days is only your friendly neighborhood soulless mega-corporation. And we all have seen the consequences of that. Stallman, creator of the GPL, is wrong.

        1. F. Beard

          I can’t wait for the fad of free software and “information should be free” to get thrown into the dustbin … Dirk77

          That’s not the point. The point is should government protect your “intellectual property”. I can see the need to protect trademarks (to avoid identity theft) but that’s about all.

          If you want to protect your IP, then keep your ideas to yourself. We’ll manage somehow without you.

          1. Dirk77

            Actually F, I have no opinion on IP, apart from what I said. I don’t know how all these things will work out; I don’t have an answer. Forcing someone to pay for something in perpetuity just because someone else was first in line by 5 minutes is not right, but neither is taking something for nothing that someone worked on for months. All work is derivative, it builds on other’s creations. But that doesn’t mean one should give away for the product of one’s time and effort because one was using something someone else gave away. “Free” is not the same thing as freedom. Nothing is free in this world.

    2. readerOfTeaLeaves

      Wonderful comment.
      This thread has me more puzzled than when I started it, and has only become more interesting with each comment.

      One of the themes that seems to emerge is, “Goldman is the same group of asshats that created ‘shitty deals’ (Abacus, Timberwolf) in which they bet against their own customers (!). Now, these whiners want to villify someone they claim stole code?!”

      I’m out of my depth, not having read the legal decisions, and with only a cursory knowledge of what happened in this particular instance.

      I doubt we’ve heard the end of this.
      But it’s interesting that no one seems to have a scintilla of sympathy for Goldman, and the failure of government legal action against derivatives manipulations, robosigning, and other frauds just pour more salt in the wound.

      So there’s resentment that the criminals are aided in prosecuting a crime against their ability to continue perpetuating rampant criminal conduct.
      Talk about your negative feedback loops, whether in cstring or any other format.

      Wonderful thread – thanks Yves!

    3. YankeeFrank

      There are other types of code aside from the rewriting of cstring and other well-worked-out functionality a developer might want to customize and bring from job to job. Certain date handling methods, specific to a certain industry, or common pricing calculations, or code in a language for which library development in certain areas is particularly thin, off the top of my head.

      1. Lambert Strether

        I seem to recall that many financial models are written in Excel. I also seem to recall that Excel’s date functions are poorly documented. (“Here’s the code. It does what it does.”) I would think that a way to standardize or represent these models with accurate date functions would have value. Ditto financial functions IIRC. Not really a programmer, and not in that field, so others can correct…

  9. ep3

    so yves, say i work for a company and i develope a fancy spreadsheet that helps a lot. so some other company says ‘hey that guy’s smart, lets hire him’. so i go to the other company and i use my knowledge i learned elsewhere and apply it to this new company. couldn’t the previous company say “he stole our software spreadsheet”? now i admit i don’t totally understand what happened here. but i am trying to think precedent. what did this guy bring to goldman? What if my small business has an idea that goldman steals? i wonder who would win that one?

    1. YankeeFrank

      That is the point I was attempting to make above. And “stealing” in the digital world is such a nebulous concept to begin with. If I take code I developed at an employer and use it as reference for later projects, is that stealing? How is that different than if I just use my memory as reference? If one is to assert there is a difference then what would one say to a developer with a photographic or other unusually powerful memory?

      In this case, if the assertions are true that Aleynikov took code and gave it lock-stock-and-barrel to his new potential employer then there is a good argument for theft, but was that proven? I guess we’ll have to read the appellate decision…

      On a related topic, I do recall that in their complaint Goldman claimed the software Aleynikov allegedly stole could be used to front run the markets. Where is the FBI or SEC investigation to ensure the code was not used for that reason by Goldman? Oh wait, the powerful do not get punished anymore for their misdeeds, I forgot.

      One commenter above stated that whether or not Goldman and others are prosecuted for their crimes, Aleynikov should be prosecuted for his. I am not so comfortable with that. We cannot maintain that our legal system is just in any way if only the little people are prosecuted… and to continue to support such a system is more than a little morally flawed.

  10. rdoug

    Be interesting if someone had the authority to look at all of Goldman’s code to see how much of it was originally stolen.

  11. Conscience of a Conservative

    The amount of money firms will spend to execute alorithmic trading is hue. It’s not just the algorithm but the speed. There’s a huge arms race goin on here as evidenced bya $300,000,000 trans-atlantic cable bein built to shave a few mili-seconds. And the DOJ went to bat for Goldman on this using laws meant to prosecute against theft of our defense secrets by the Chinese.

  12. Mac

    If you carry off programs or sub sets of programs that you or others were paid to write, it seems to me it is theft. Carrying off what you have in your head is probably a different idea.
    I would assume that carrying off physical applications of open source is also theft, again what you have in your head is a different deal.
    If you executed some sort of agreement about use of ideas developed while in a companies employ it is probably different.

    1. YankeeFrank

      Your assertions are flawed. Many who work in actually innovative fields sign non-compete agreements where they agree not to go work for direct competitors for a number of years. If software were such an innovative field, then why no non-compete agreements? This is for two reasons — one is that non-competes require high compensation to offset the potential unemployment they may result in. The other, and better) reason is that software development is not innovative work, except on the real bleeding edge — work done at the MIT Media Lab or the former Xerox PARC facility.

      Additionally, developers almost all bring code from prior work into new environments. Its a natural part of the work — special classes that provide specific functionality that have been debugged thoroughly are useful in many environments despite the fact they are not innovative in any true sense. Who is an employer to say they can’t take that code with them which was developed outside the current environment, used to benefit the current environment, but really the property of no one?

      I’m not sure what you mean by “physical applications of open source” but open source by its definition doesn’t need to be carried off to be used, its already licensed to be publicly available.

      By your logic a man with a photographic memory shouldn’t be allowed to use same to recall and reuse code he has read. Good luck with that.

  13. charles sereno

    I’m seriously concerned if we start overloading our prisons with “Aleynikovs.” Oh, not a problem. An example or two will do.

Comments are closed.