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Former Goldman Sachs programmer Sergey Aleynikov, one of the central figures in the high-frequency trading exposé Flash Boys, has been found guilty on one count of "unlawful use of secret scientific material" for "stealing" high-speed trading code from Goldman Sachs. He was acquitted of "unlawful duplication of computer related material," and another "secret scientific material" charge may be dismissed by mid-June. He may face between one-and-a-half and four years in prison, although there is no mandatory minimum for the charge, and the judge has indicated that he is likely to be lenient.
"Aleynikov left Goldman Sachs in 2009 for a high-speed trading startup and was arrested by the FBI after he was caught downloading a copy of the firm's code to his home computer." Aleynikov's first trial resulted in a sentence of 97 months in prison for two counts of theft of trade secrets, but the conviction was overturned by the United States Court of Appeals for the Second Circuit. This time around, the State of New York charged Aleynikov. "Manhattan District Attorney Cyrus Vance called the source code that Aleynikov had copied [Goldman Sachs'] 'secret sauce'."
The case almost ended up in a mistrial due to a dispute between two jurors which led to their dismissal. One juror accused another of "food tampering" because an avocado was missing from her sandwich, and said she took a blood test to determine whether she had been poisoned. The judge called the accusations "completely unfounded," and Aleynikov's lawyer agreed to drop a request for a mistrial and proceed with a 10-member jury. Aleynikov's lawyer has until May 15 to file a motion for dismissal.
(Score: 3, Interesting) by VLM on Monday May 04 2015, @12:32PM
From "sit at the bar and talk to people" level conversations, old coworkers at a financial services institution, etc, I was under the impression that the half life of an HFT strategy was like one week, and the secret sauce wasn't in the numerical number crunching code algorithm but was in the formatted data it ate, and the money was all in the execution of optimized systems, not in the system itself.
So by analogy what I was hearing from them was the source code for Excel is useless, even a raw dump of a spreadsheet is useless, but its all in the guy who manipulates the spreadsheet and gets results out of it in a second.
I would guess given that impression the only reason they don't just post stuff on github is the usual security theater bamboozle plus some typical patent/copyright concerns.
Given all the above other than the security theater / intimidation value there probably isn't much of a loss for GS if someone downloads their stuff. If there was an actual loss it would have to show up in the SEC reports if the dollar value were significant, which I'm sure it doesn't.
(Score: 0) by Anonymous Coward on Monday May 04 2015, @01:08PM
The source code of Excel is definitely not useless, it's the end result of hundreds of man-years of work (even not counting the work of short-term maintenance programmers who spent most of their time trying to understand the existing code). Yes, many people could code a spreadsheet, but in most cases it wouldn't be very good. And yes, the value of that work is independent of all the financial models people have built using Excel.
So perhaps that's not a bad analogy for what the GS programmer did.
(Score: 2) by MrGuy on Monday May 04 2015, @03:11PM
I think you're missing the analogy (or maybe I am). As I interpret GP, he's trying to make the point that, if you want to replicate the results of a highly effective trader, the code for the underlying trading platform (sans models) isn't helpful, and a stale snapshot of the models is only somewhat helpful - the value a highly effective trader delivers is in constantly adjusting and changing the models and algorithms to stay ahead of the market.
It's not that the source code for Excel is valueless (clearly it has high value). It's that having the source code to Excel (which is still the most popular tool I see in the industry for building out new financial models) doesn't actually help you replicate someone else's models BUILT on Excel. The platform by itself doesn't help you replicate someone else's results. Stealing someone's copy of Excel (or by analogy another trading platform) isn't a terribly useful operation.
Having someone else's financial models and outputs WOULD help you replicate their results, for awhile. However, as the market adjusts and learns, models that were highly profitable at one point in time will be less effective later, so an unmaintained snapshot of someone else's models would not bring you long term value.
The point GP was making (as I understand it) is that even IF this trader downloaded all the code to GS' platform, and all the models in use, it's still not entirely clear that he stole something that would (by the time it was used elsewhere) remain long-term useful.
(Score: 0) by Anonymous Coward on Monday May 04 2015, @04:12PM
Actually I think we agree, or aren't far apart. The platform code that the GS allegedly stole probably *does* have high value, but the value of that code is as a long term asset. It's like the difference between a game engine, and a specific AAA game that was built using the game engine. Both can have high value.
(Score: 4, Informative) by btendrich on Monday May 04 2015, @02:28PM
From what I remember from the book (Flashboys or something like that), what he downloaded *was* from github (or something similar). There was quite a bit of information in the book about what happened to this guy, and basically Goldman Sachs was trying to screw him after he quit and was going to work for somebody else. According to the book, he was frustrated at Goldman, trying to heap fast stuff on top of old stuff and was given an opportunity to go to another (startup?) firm and write the system from scratch. If I remember, the old stuff was written in a different language than their new system was anyway.
This is entirely about Goldman trying to screw him for walking out on them, the Feds lost on appeal so Goldman pressured the state of NY to go after him... It's sad.