Goldman Sachs Sacked by Programmer

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Feb 18, 2010 9:12 am

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An irreverent Wall Street Blog

by Bill Singer

Goldman Sachs Sacked by Computer Programmer

Written: February 18, 2010

Goldman Sachs' high-frequency
trading system generates millions of dollars in annual profits for the firm.
Obtained in 1999 as part of Goldman's $500 million acquisition of Hull Trading
Company, the high-frequency trading system has since been modified and
maintained, and Goldman Sachs took significant measures to protect the
confidentiality of the system's computer programs (including firewalls to limit
access to the firm's computer network, and limiting internal access to the
high-frequency trading program). Several measures were taken to protect the
system's source code, including requiring all Goldman Sachs employees to agree
to a confidentiality agreement.

From May 2007 to June 2009, Sergey Aleynikov was employed at Goldman Sachs as a
computer programmer responsible for developing computer programs supporting the
firm's high-frequency trading on various commodities and equities markets.

 In April 2009, Aleynikov resigned from
Goldman Sachs and accepted a job at Teza Technologies ("Teza"), a
newly-formed company in Chicago, Illinois. Aleynikov was hired to develop
Teza's own version of a computer platform that would allow Teza to engage in
high-frequency trading.

Beginning at approximately 5:20 p.m. on June 5, 2009, Aleynikov's last day at
Goldman Sachs, he transferred substantial portions of Goldman Sachs's
proprietary computer code for its trading platform to an outside computer
server in Germany (all of which was accomplished while working at his desk at
Goldman Sachs). Without informing Goldman Sachs, Aleynikov encrypted the files
and transferred them over the Internet. After transferring the files, he
deleted the program he used to encrypt the files and deleted his computer's "bash
history," which records the most recent commands executed on his computer.

Throughout his employment at Goldman Sachs, Aleynikov transferred (without
Goldman Sachs' authorization) thousands of computer code files related to the
firm's proprietary trading program from the firm's computers to his home
computers. He accomplished these transfers by e-mailing the code files from his
Goldman Sachs e-mail account to his personal e-mail account, and storing
versions of the code files on his home computers, laptop computer, a flash
drive, and other storage devices.