A FORMER Goldman Sachs employee has been charged with stealing computer codes related to the firm’s high-speed trading platform.
Sergey Aleynikov, a naturalised US citizen who emigrated from Russia, allegedly unlawfully copied, duplicated, downloaded and transferred computer codes from a New York-based financial institution and uploaded the codes to a computer server in Germany, according to a complaint filed by federal prosecutors.
The complaint from the government didn’t specifically reference Goldman Sachs. Goldman Sachs was referenced during Saturday’s bail hearing, and a person familiar with the matter confirmed that Mr Aleynikov worked as a computer programmer for the company.
The person familiar with the matter also said the theft has had no impact on Goldman Sach’s clients and no impact on its business. The person said the codes involved Goldman Sachs’ proprietary trading, which is its business of trading securities with its own money.
Goldman Sachs has historically relied on proprietary trading for a large share of its revenue. The company does not break out specific profit or revenue for this business. The allegedly stolen codes related to proprietary trading that is done using computers.
Brad Hintz, a former chief financial officer for Lehman Brothers, said any theft of the codes would likely not have any serious impact on how Goldman does business. Whoever got their hands on the code might simply be able to execute a trade a bit faster than the securities firm, he said.
“There’s a lot more to Goldman Sachs than one (proprietary) trading desk, or even all of prop trading,” said Mr Hintz, now an analyst with Sanford Bernstein. “Wall Street’s systems may be the best in the world…this wouldn’t be an end-of-the-world event.”
Shares of Goldman closed up $US2.97, or 2.1 per cent, at $US146.46.
The alleged actions took place between June 1 and Friday, when Mr Aleynikov was arrested as he got off a flight at Newark Liberty International Airport. Mr Aleynikov worked at Goldman as a computer programmer from about May 2007 until about June 5.
Many Wall Street firms have cut back on riskier forms of proprietary trading since the onset of the financial crisis. However, there has been some indication that Goldman and others are ramping up this business again.
Questioned by Federal Bureau of Investigation officials, Mr Aleynikov admitted only to “unwitting conduct,” that whatever he is accused of doing wasn’t done on purpose. Mr Aleynikov’s lawyer, federal defender Sabrina Shroff, said she believed her client was innocent.
According to the complaint, Mr Aleynikov said after his arrest that he “only intended to collect ‘open source’ files on which he had worked, but later realised that he had obtained more files than he intended”.
He also “claimed that he did not distribute any of the proprietary software that he obtained from the financial institution” and had agreed with the new employer not to use unlicensed software.
Mr Aleynikov was granted bail. Bail includes a $US750,000 ($941,000) personal recognisance bond secured by three financially responsible persons and $US75,000 in cash.
He must surrender all travel documents, and travel is restricted to New Jersey and the southern and eastern districts of New York — Manhattan and Long Island.
FBI special agent Michael G. McSwain said in the filing that the computer codes were related to a platform that allowed Goldman Sachs to engage in high-speed and high-volume trades on stock and commodities markets.
The bank considers the code to be proprietary, confidential information and trades made on the platform generate millions of dollars in profits each year for the company.
The filing said Mr Aleynikov was given access to the computer code as part of a team responsible for developing and improving the platform. The company said he was required to sign its confidentiality agreement when he first took a job there.
The filing said at some point before June, Mr Aleynikov told Goldman Sachs he would resign. His salary at the time of his resignation was about $US400,000 a year. The FBI agent said a Goldman representative who spoke to Mr Aleynikov about his resignation said he was leaving to work for a new company that also planned to engage in high-volume automated trading.
Mr Aleynikov previously worked for telecommunications company IDT Corporation, where he worked as a systems architect for routing and internet phone service, according to his page on business networking website Linked-In. He also achieved a masters of science degree in 1996 from Rutgers University.
Additional reporting: Amir Efrati
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