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Monday, Jul 6, 2009 8:57 PM UTC

Cyberpunk treachery at Goldman Sachs

A tale of stolen stock trading code and emigrant Russian computer programmers. And ballroom dancing!

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Topics: How the World Works, Goldman Sachs, Valentines Day, Wall Street, Bolivia,

Meet Sergey Aleynikov, a character ripped straight from the pages of a classic William Gibson novel: competitive ballroom dancer, computer programmer, free-software enthusiast, Russian emigrant to the U.S. and former employee of Goldman Sachs. On July 3, a month after quitting his $400,000 Goldman job to work for a Chicago firm at three times the salary, Aleynikov was arrested on charges of illegally stealing proprietary automated stock-trading software from his employer and uploading it to a Web server in Germany. (Found via Zero Hedge.)

And not just any software. Reuters’ Matt Goldstein, who broke the story, calls the code Goldman Sachs’ “secret sauce.” An affidavit filed by FBI special agent Michael G. McSwain describes it as follows:

A computer platform that allows the Financial Institution to engage in sophisticated, high-speed, and high-volume trades on various stock and commodities markets. Among other things, the Platform is capable of quickly obtaining and processing information regarding rapid developments in these markets … The Financial Institution believes that certain features of the Platform, such as the speed and efficiency by which it obtains and processes market data, give the Financial Institution a competitive advantage among other firms that also engage in high-volume automated trading.

So what we’re talking about here is the code employed by the most sophisticated financial institution on the planet to execute automated stock trades. Code that could presumably be sold to the highest bidder for a pretty penny. Really — if one were to pick a candidate for software likely to develop emergent artificial intelligence, this would have to be it, right? Just kidding. Kinda.

Aleynikov told the FBI that he had intended to download only nonproprietary “open source” files but had accidentally included code that was not free to share. Oops! But, at least so far as described in the affidavit, his story doesn’t look so good, since shortly after transferring about 32 megabytes of code to the German Web server, he attempted to erase the history of the sequence of commands he had employed to transfer the code from his Goldman computer. Unbeknownst to him, however, Goldman kept a separate backup of each employee’s programming history. Double oops! The perils of a network!

Tyler Durden at Zero Hedge offers a wealth of speculation about what the whole saga implies for Goldman Sachs and recent zany stock market behavior. I am in no position to judge whether Aleynikov’s shenanigans portend “doom for … the entire Goldman Sachs program trading group,” as Durden hints, but the story sure has movie treatment written all over it. Kevin Spacey is probably a bit long in the tooth to play the lead role. Maybe Edward Norton?

Just for fun, here’s a clip of a Serge Aleynikov and his wife, Elina, dancing to “You Light Up My Life.”

Andrew Leonard

Andrew Leonard is a staff writer at Salon. On Twitter, @koxinga21. More Andrew Leonard.

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