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Crime The Almighty Buck The Courts

In Second Trial, Ex-Goldman Sachs Programmer Convicted of Code Theft 84

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

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  • by HairyNevus ( 992803 ) <hairynevus.gmail@com> on Saturday May 02, 2015 @11:41PM (#49604009)

    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' (Score:4, Informative)

    by Anonymous Coward on Sunday May 03, 2015 @12:02AM (#49604059)

    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.

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

      http://en.wikipedia.org/wiki/T... [wikipedia.org]

      • The example of theft of service is a stretch for this case. In all of the examples given on Wikipedia for theft of service, real resources were consumed in a manner that is not replacable. In the case of copying data, the most you suggest is that he was stealing his own time on the clock. But there is absolutely no precedent to allow for that.
        • Re:give it up (Score:4, Insightful)

          by Greyfox ( 87712 ) on Sunday May 03, 2015 @01:08AM (#49604215) Homepage Journal
          I ran across a great quote [youtu.be] the other day.
          • by unrtst ( 777550 )

            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.

      • Re: (Score:3, Insightful)

        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
        • "Stealing is taking things from other people."

          "Popular dictionaries and encyclopedias say that intellectual property theft is also stealing."

          "Well, yes, but that's not a *true* Scotsman."

          • by Anonymous Coward

            And here we see a perfect example of multiple fallacies.
            The most obvious one would be the strawman. Applying the Scotsman without the parent first taking this step.
            The other one would be appeal to authority. Through corruption the law has been changed to treat ideas as if they could be truly stolen, why should dictionaries be held as a higher authority than the law?
            And the last and least obvious, the fallacy fallacy. Finding a fallacy can invalidate the argument, it doesn't need to, and even if the argument

        • by rtb61 ( 674572 )

          Face, the target should be thankful, that a major corporate political player is not claiming the defendant murdered the data and should be executed. Clearly they feel infringed upon and are using their control of the US department of in-Justice to persecute the individual. I am surprised they did not go the espionage route if the code just appears in another country.

      • by dbIII ( 701233 )
        We could also just as accurately say that Goldman Sachs stole the Greek economy among many other things.
        I suppose it could always be argued that the Greek government didn't have to follow their advice, and that "sharp practice" is the American way that they should have been wary of - but it isn't what is supposed to be the American way is it?
        It's the same with proposing to jail a copyright infringer for longer than a rapist or armed robber - something to be ashamed of. Just because Goldman Sachs execs like
      • Re:give it up (Score:5, Insightful)

        by ultranova ( 717540 ) on Sunday May 03, 2015 @03:08AM (#49604385)

        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.

        • I think you'll find that "intent to deprive" is not part of all people's intuitive definitions of theft, even if it is involved in many legal statutes. I know it took me a while to be convinced that there were people for whom the intuitive definition did require intent to deprive.

          "He stole my idea!" is a common phrase, for instance, and widely understood. That's usually stated by the person who is *not* the entrenched business.

          I think this semantic argument about "stealing" and "theft" is a weird bleed-th

      • When you jump the turnstile in a subway, you are taking up room in a potentially crowded train and lowering the quality of service for paying customers. You are consuming resources without paying for them. That is still the same concept as theft of a physical object. Copying is different than stealing in that no additional resources are consumed.
    • You are not the only person here to make a case against the conviction on the basis of the meaning of 'stealing', but such arguments don't get anywhere, as the law contains precise definition of what the word is intended to mean in this case (if it actually says 'stealing', which I doubt.) A more pertinent question might be how a matter that should fall under civil / contract law has been turned into a criminal offense.

      On the other hand, your characterization of Goldman Sachs' behavior is spot-on.

    • 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.

      It may actually be stealing in the sense of depriving someone too. The code supposedly included trade secrets. Trade secrets are no longer valid once disclosed. The disclosure does not have to be intentional, my understanding is that accidental, negligent, etc disclosure counts too. So if the trade secrets were lost through the source code being copied then the owner was deprived of their trade secrets and theft would have occurred.

      "secret scientific material" is probably a pseudonym for trade secrets. S

      • The owner was not deprived of the trade secrets. The owner still has all the information. It's just not secret anymore.

        Let's say I buy a Ford F series truck. It's "America's best selling car". Now lets say a Toyota model gains the title. Was an "America's best selling car" stolen from me? I used to have one, and now I don't. I still have the same car I always had. It's just not the most popular anymore

        • The owner was not deprived of the trade secrets. The owner still has all the information. It's just not secret anymore.

          Its not that simple. The legal and property protections offered by a trade secret, a legally recognized type of intellectual property, is lost. The owner deprived of its benefits.

          Let's say I buy a Ford F series truck. It's "America's best selling car". Now lets say a Toyota model gains the title. Was an "America's best selling car" stolen from me?

          That is a title not a trade secret. Again a trade secret is a legally defined type of intellectual property that offers the owner specific legal rights and privileges. For example something in the process that Ford uses to manufacture those trucks. A Ford employee could not take that process to Toyota.

          • Its not that simple. The legal and property protections offered by a trade secret, a legally recognized type of intellectual property, is lost. The owner deprived of its benefits.

            Obviously the owner is deprived of the benefits of a trade secret once it is no longer secret. All I am saying is that this benefit was not stolen.

            That is a title not a trade secret. Again a trade secret is a legally defined type of intellectual property that offers the owner specific legal rights and privileges. For example something in the process that Ford uses to manufacture those trucks. A Ford employee could not take that process to Toyota.

            I am not arguing that the title of "America's best selling car" and a trade secret are legally equivalent. I am saying that they are logically analogous. A person may derive great pleasure form owning "America's best selling car", and if it ceases to be so, that person is deprived of that benefit. Whether that person is legally entitled to those benefits or n

    • The district attorney charged Mr. Aleynikov with the unlawful use of secret scientific material and duplication of computer-related material, both felonies under New York State law.

      The overturned Federal verdict was on charges of theft, but the state charges did not involve the word.

  • How it works (Score:5, Insightful)

    by Required Snark ( 1702878 ) on Sunday May 03, 2015 @01:12AM (#49604217)
    Wall Street gets to steal from everybody.

    Nobody gets to steal from Wall Street

  • by Saffaya ( 702234 ) on Sunday May 03, 2015 @01:14AM (#49604221)

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

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

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

    • Re:Double jeopardy ? (Score:5, Interesting)

      by stephanruby ( 542433 ) on Sunday May 03, 2015 @03:26AM (#49604411)

      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 [nytimes.com]

      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 [nytimes.com]

      • Thank you for your highly informative comment about Goldman Sachs indemnifying its employees for legal fees.

        It seems that Goldman Sachs may be hoist by its own petard here, if the intent behind this provision was, at least in part, to enable 'aggressive' behavior by its officers and employees (i.e. to flirt with arguably illegal behavior).

        • Apparently, Mr. Aleynikov's real mistake is that his behavior wasn't profitably illegal...

        • It seems that Goldman Sachs may be hoist by its own petard here, if the intent behind this provision was, at least in part, to enable 'aggressive' behavior by its officers and employees (i.e. to flirt with arguably illegal behavior).

          Plus it also means that if one day you're accused of doing something illegal on behalf of Goldman Sachs, it means you better select the lawyer Goldman Sachs chooses for you, and you better not name any co-conspirator, or make your employer look bad in any way, because they will most likely stop paying for your legal bills if you do.

  • by Anonymous Coward

    I find it incredible that the people doing high frequency trading, allowing it, getting kickbacks for allowing it, feeding the output of their crappy algorithms back into the market are not all in prison. If some people of insider knowledge of trades before every one else and trade on that knowledge surely it is a crime. The regulators, the bodies that run the exchanges and the banks are all participating in this mad scam.

  • by DougPaulson ( 4034537 ) on Sunday May 03, 2015 @04:21AM (#49604491)
    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 [abovethelaw.com]

    Lawyer for Ex-Goldman Programmer Criticizes Prosecutors and Firm [nytimes.com]
    • by timmyf2371 ( 586051 ) on Sunday May 03, 2015 @05:25AM (#49604565)

      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.

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