Programmer gets 8 years for theft of stock trading software A former Goldman Sachs software developer has been sentenced to eight years in prison for stealing proprietary code used in the firm's high-speed trading platform. Sergey Aleynikov worked at Goldman from 2007 to 2009 and was a programmer responsible for the firm's high-frequency trading software, which has generated more than …
That's no wrongdoing and certainly not stealing.
The "stealing" part comes when the [government-generated] bubble bursts, the balance sheet of the bank-cum-trader redlines and then a [government-managed] "bailout" occurs because the bank is "too big to fail".
Yes, the bank has just socialized its losses. How cool is that.
It's high *frequency*, not high volume.
These are systems that can see potential trends develop before that information is available to private investors, so execute orders based on information the entire market doesn't have, and possibly create price movements that otherwise wouldn't happen. Nothing to do with "investing", not much to do with liquidity, but - arguably - looking like a parallel of insider trading.
"No doubt the same may be said of all professions. They are all conspiracies against the laity"
George Bernard Shaw, The Doctor's dilemma,
http://ije.oxfordjournals.org/content/32/6/910.full?ijkey=9021b5aa65b1527abae86cbfdff1f28df9c693ad&keytype2=tf_ipsecsha
The greatest thieves are those who write the laws which make their thieving from the general population legal. None more so than the bankers. That isn't to say we don't need a competitive banking system. But I for one have moved my account to a mutual building society, which operates as a non profit making entity, and which is large enough to avoid threat of corporate canibalism and small enough that the taxpayer isn't obliged to bail use on the grounds we are too large to be allowed to fail.
... people wouldn't be interested in pirating financial market software...
-- -- http://www.theregister.co.uk/2010/09/24/piracy_open_source_bsa/
-- -- -- About half-way down:
-- -- -- "While the BSA is concerned with paid-for, proprietary software, most of the world's software is not written by proprietary software firms, but instead by enterprises whose primary business is not software, but rather finance, pharmaceutical and so on. The software written by Morgan Stanley for Morgan Stanley simply isn't going to be pirated."
... while I indicated that the potential profits of successful industrial espionage against a market trading firm make it worth-while to some:
-- -- http://forums.theregister.co.uk/forum/1/2010/09/24/piracy_open_source_bsa/
-- -- -- Again, about half-way down:
-- -- -- "To use Morgan Stanley as an example: A slightly-off-center firm could "buy" a chunk of code from a disgruntled Morgan Stanley IT wonk, reverse-engineer the code to gain insight into Morgan Stanley's trading algorithms, and look for routines related to arbitrage transactions**. They could then design more efficient, lower-latency routines that take better advantage of price difference windows, thereby gaining a competitive advantage with regard to automated trades.
Never underestimate the power of (successful) industrial espionage."
The alleged perpetrator could (conceivably) made a lot of cash from his misdeed, except he used the wrong tools and facilities to commit the crime: He used the company's network to transfer the stolen material to servers across the Big Pond. Even if he encrypted the code, libraries, etc. before transmission, I venture that sending what was likely a substantial amount of data to a foreign IP address threw up a lot of red flags, and quickly caught the attention of the network/security admins at Goldman Sachs.
Not to mention that the Bourne-Again Shell keeps command history in a file, which means, ostensibly that the command history is written to a storage device of some sort. I doubt the developer's workstation ran from a RAMdisk, and depending on the underlying filesystem, the history of his entire session may have still been recoverable, even if he took care to erase it; some filesystems use a Copy-on-Write process which maintains earlier versions of files in their entirety until a lack of space mandates the used blocks be reclaimed.
Erasing .bash_history or symlinking it to /dev/null is an automatic red flag in my book. By the way, it is always better to symlink it to /dev/null first than erase it afterwards. Once this is done the snapshotting system can snapshot till doomsday with no result and the only way to understand what happened is from the audit trail (which works on Linux only half of the time).
As far as the software it depends what he pinched. Trading software usually consist of multiple components. Matt Assay was probably correct with respect to the part that makes the actual trading decisions. It is worthless without the math behind it. It is likely to be easier to write it from scratch with the math in hand than reverse engineer the math from the code. Maintaining pinched code and keeping it low-latency optimised without the knowing math is in the realm of outright impossible.
That however is not all of the software. Doing compliance logging without slowing the system down, reading the market feed, issuing orders, matching feed to orders, monitoring the system state, etc and doing all of that without introducing significant latency is worth it to be pinched. Various libraries, hacks and "improvements" to the network stack (some of which are better described as vandalism), etc are also worth pinching.
If he didn't know / research what would happen when he copied stuff like that & whether he should use a live CD etc, he was asking to get caught. Who knows what they might be logging?. If he couldn't stop being logged he could have tried to infect someone else's machine on the network with appropriate malware so that his dodgy ftp or copying would be lumped in with the rest of the security fiasco if anyone even noticed it, for example.
Just copying it & doing some inadequate heavy-handed deletion seems dumb.
Alternatively he was grassed up by the start-up
The Learned Beak summed up the whole of Goldman Sachs corporate mentality best demonstrated by them selling product and then betting it would decrease in value.
Of course, being bankers they are above the law. Let's hope Sergey Aleynikov made some decent bucks out of the deal.
Even with a record, Sergey Aleynikov will make ideal human resources material to work in the financial industry with his morals.
I was sorta hoping he would get away with it and it would show up on piratebay and I could become rich off the stock market along with all the other pirate bay users. Then we would have so many rich people the term would no longer have any meaning and capitalism would have been turned on its head.
It's people like this programmer clown that force honest and reputable companies like Goldman Sachs to have to pay off judges and politicians. And just think of how humiliating it is for them to have to beg the government for tax payer money with which to do so.
It's good that they locked up this guy and threw away the key. Anyone who messes with software that provides such value to all of society should be made an example of. Software that allows a bank to make itself an obligatory middle-man by virtue of network lag allows the wheels of society to turn. Without it would Fred be able to work assembling Hummer H2s at GM?...oh wait, that's China now. Well, what about Bob the steel worker...no, that doesn't work. Wait, I've got it, Joe the ethanol corn farmer! Who thinks of poor, poor Joe?!
If some guy just photocopies the secret Coca Cola recipe then the Coca Cola Company doesn't really lose anything, but if he then starts selling cola made to the recipe he's potentially stealing their market share. This guy was trying to sell the Goldman Sachs secret recipe to a competitor.
So the guy get 8 years for stealing intellectual property, no voilence involved, etc.
If he had downed a bottle whiskey, got behind the wheel of car and killed somebody, I bet he would spend less time in jail.
Kind of shows the priorities of the judicial system
2 thoughts spring to mind...
1) Working in the finance sector and having been interviewed by GS I know that most of their code is written in a proprietary in house language called slang (I think) and sits on a system called secDB. Very much not open source.
2) I have never done or been in the position to do this.. but in this sector developers bringing code with them when they move from one role to another (accompanied by a huge pay rise etc) happens all the time. In fact I'd wager that in the interviews when they get asked about what they've worked on and so on the developers will quite happily suggest that they can get a "similar" system going in the new role.. they get offered a job with a hefty package and the new company turns a blind eye / pleads ignorance into how they got a new trading system going in a matter of weeks once this new guy joined. Same thing happens with quants and mathematical models..
this guy knew exactly what he was doing and knew it was wrong, the comany he is moving to is most likely complicit also and should probably face some sort of penalty
>generated more than $500 million in profit for the firm since 1999
500 million spread over 10 years is a drop in the ocean to GS so unless the more was considerably more then the software isn't really worth the bits it's written in and this is probably more a case of muscle flexing to propogate fear among current minnows.
GS probably lose substantially more when an executive leaves taking a few clients with him/her.
Steal some code.
Social cost of crime: negligible.
Punishment? 8 years in jail.
--- Vs ---
Trade in dubious products, mis-sell loans, misrepresent assets, evade taxes, evade regulatory controls.
Social cost of crimes: massive to the point of being incalculable.
Punishment? None. Instead you get bailed out by the people you ripped off and can still pay yourself billions in bonuses.
He stole the code, got caught, end of story. BUT...
Flame because it pisses me off that this guy got 8 years, while his crook employers and their ilk get away time and time again with insider trading, marketing manipulations etc. As for the software itself, it's a high-power gambling software. It might be technically legal but it's actually the equivalent of having a computer count cards for them. I'm pretty sure that's illegal at any vegas casino, so why is it OK at the wall street casino?
Good way to deal with social ripoff by any high speed trading system. Take a very small tax slice automatically from every trade and those making these are then more likely to be forced to think about whether there is any real, as opposed to just short-term speculative value involved.
Stamp duty has a similar effect on the UK housing market. This forces home buyers to have a genuine business or accomodation purpose before buying and selling, and it reduces the risk of speculative leeches parasiting the rest of us over short term instabilities which they would otherwise be incentivised to generate.
It's irrelevant what the code did or the harm it might have done. He didn't steal it to release it for the public good. He stole it and took it to a software company looking to write similar software. There is no moral justification there.
What GS do may be immoral (or on the other hand it may be legitimate) but that's not relevant to this case and it doesn't justify theft.
You take other people's money.
You swap it around as quickly as possible taking a tiny cut every time it is moved.
Better still, the value you are trading is partly or wholly fictitious. Just made up by your pet rating agency.
So you are taking a real money cut of fictional value as often as possible.
And eventually, everyone wonders where all the money went.
Def not found in your record profits or the bonuses to the traders.
Best of all, people borrowed against the fictional value that you had skimmed as much as possible of. Creating real money debts against fictional value. When the bubble burst, they still have to pay it back. Unable to do so, you take the land out from under them.
You can then sell it back to the next batch of suckers.
Sell the land. Steal it back. Sell it again.
Repeat. Repeat. Repeat.
Profit on the ups. Profit on the downs.
Too big to fail.
How to steal a nation.
Also, as all this national economic stability is a matter of nat sec and as every nation has a dept of economic warfare that uses all the value (real or otherwise) to improve its fortunes, the banks work with the spooks. As such the spooks are captured. Caught in a financial honey trap.
Photo'd in bed with some of the bank's dirtiest secrets. They become extra keen on keeping the banks from feeling the need to reveal what has been going on.
How to steal a nation's spooks. And with them the military. As the mil act on what the spooks tell them.
Now, do this to more than one nation. Now you're cooking! Supranational biz/spook alliance that doesn't care about the fortunes of any given state. And being unelected, supranational and preying on the public, it doesn't care what voters want either. Might even start a war to distract from looking at it.
http://en.wikipedia.org/wiki/Atlas_Economic_Research_Foundation
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