Ex-Goldman programmer eyes US dismissal;talks go on (stolen trading program worth billions)

Source: Reuters

NEW YORK, Aug 17 (Reuters) - A federal judge has granted more time for the government to seek an indictment against or work out a settlement with a former Goldman Sachs Group Inc
(GS.N) programmer accused of stealing trade secrets, after the programmer's lawyer said she wants the case dismissed.

U.S. Magistrate Judge James Francis delayed further proceedings by 30 days until Sept. 16 to let the government and Sergey Aleynikov, the former programmer, continue talks.

Assistant U.S. Attorney Joseph Facciponti said talks to resolve the case have gone on from July 7 to as recently as Aug. 13, and that justice would be served by giving the parties
more time. Talks were previously extended on Aug. 3.

It is common for prosecutors to ask to extend a deadline for seeking an indictment while plea negotiations are taking place. The request does not mean a settlement is forthcoming.
Prosecutors have accused Aleynikov of downloading stolen Goldman proprietary code onto a home computer, a theft that could cost the Wall Street bank millions of dollars.

Aleynikov has told investigators that Goldman knew he had worked on the relevant code from home previously without complaint, and that he had no intent to steal.

Read more: http://www.reuters.com/article/bondsNews/idUSN1733457320090817

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background:

http://www.bloomberg.com/apps/news?pid=20601087&sid=axYw_ykTBokE

July 7 (Bloomberg) -- Goldman Sachs Group Inc. may lose its investment in a proprietary trading code and millions of dollars from increased competition if software allegedly stolen by a former employee gets into the wrong hands, a prosecutor said.

Sergey Aleynikov, a 39-year-old ex-Goldman Sachs computer programmer, was arrested July 3 after arriving at Liberty International Airport in Newark, New Jersey, U.S. officials said. Aleynikov, a citizen of America and Russia who joined the bank in 2007, is charged in a criminal complaint with stealing the trading software. Teza Technologies LLC, a Chicago-based firm co-founded by a former Citadel Investment Group LLC trader, said it suspended Aleynikov, who started there on July 2.

At a court appearance July 4 in Manhattan, Assistant U.S. Attorney Joseph Facciponti told a federal judge that Aleynikov’s alleged theft -- the largest breach at Goldman Sachs -- poses a risk to U.S. markets. Aleynikov transferred the code, worth millions of dollars, to a computer server in Germany, and others may have had access to it, Facciponti said, adding that New York-based Goldman Sachs may be harmed if the software is disseminated.

“The bank has raised the possibility that there is a danger that somebody who knew how to use this program could use it to manipulate markets in unfair ways,” Facciponti said, according to a recording of the hearing made public yesterday. “The copy in Germany is still out there, and we at this time do not know who else has access to it.”

Rapid-Fire Trading

About 28 percent of the shares traded in the U.S. during the fourth quarter were handled by automated brokerages using algorithms to generate rapid-fire trading strategies, according to estimates from NYSE Euronext, the world’s largest operator of stock exchanges. That’s up from 17 percent a year earlier, and almost three times larger than the portion of volume generated by individual investors, according to NYSE Euronext.

Goldman Sachs stands to lose if its trading technology leaks out, Facciponti told the judge.

“Once it is out there, anybody will be able to use this, and their market share will be adversely affected,” he said.

Michael DuVally, a spokesman for Goldman in New York, declined to comment. A person close to the bank said yesterday that the alleged theft wouldn’t hurt its business or customers.

...more...

$100 million per day?

http://www.dailykos.com/storyonly/2009/7/6/750420/-Breaking:-FBI-Arrest-Opens-Goldman-Sachs-Pandoras-Box

Mon Jul 06, 2009 at 02:51:26 AM PDT
Up until about two weeks ago, Matt Taibbi's favorite Goldman Sachs' market observers, the folks over at the Zero Hedge blog, had been continually commenting over the past six-plus months about how Goldman had all but cornered the market on program trading within the NY Stock Exchange. (Program trading is the automated stock trading via computers by firms specially authorized by the NYSE to facilitate same.) Clearly, according to Zero Hedge publisher Tyler Durden, something was up.

A couple of months ago, we also learned through Zero Hedge that Goldman had profited greatly from a sweetheart deal with the federal government concerning a new program instituted by the Feds known as "The Supplemental Liquidity Provider" Program ("SLP"), launched this past Thanksgiving, which was supposed to provide "market liquidity" (i.e.: an ongoing, active market) for selected groups of 500 different NYSE stocks per SLP participant. As Durden pointed out to all who were interested, it certainly appeared to him that Goldman was the only active participant in the program.

Maybe you people at GS are adversely affecting the market...

glad to have you here :)

:hi: