U.S. Federal Prosecutor: Stolen Goldman Sachs Software Could be Used to “Manipulate Markets in Unfair Ways”
July 8th, 2009This isn’t a free market; it’s a black magic trick, involving supercomputers, psychological operations and lots and lots of leverage.
—CBOT Resembles Carnival Act as Billion Dollar Black Box Operators Move In
Imagine my shock.
Via: CNBC / Reuters:
The purported theft of a Goldman Sachs trading platform threatens to cost it millions of dollars, a prosecutor told a court, but so far the bank has not reported damage to its business.
Questions were raised about the security of proprietary trading systems at a court hearing on July 4 for a former Goldman computer programmer arrested on a charge of stealing the information, which was copied to a server in Germany.
If the stolen information, or trading code, is allowed to go to a competitor who can start trading with it, “the bank itself stands lose its entire investment in creating this software to begin with, which is millions upon millions of dollars,” warned U.S. prosecutor Joseph Facciponte, according to a transcript of Saturday’s proceeding.
He added that because of the way this software interfaces with the various markets and exchanges, the bank has warned it could be used to “manipulate markets in unfair ways.” The FBI in New York said on Tuesday that measures had been taken to prevent code being sent from the server in Germany.
“Working through our assistant legal attache in Frankfurt and with the authorities in Germany, the FBI has taken steps to ensure that the appropriated code was not distributed,” FBI spokesman Jim Margolin said.
Sergey Aleynikov, 39, who left Goldman on June 5 for a Chicago firm and was arrested last Friday night, gave consent to the FBI to visit his home in Little Falls, New Jersey, over the weekend and remove all of his personal computers, according to court documents.
They show that Aleynikov, a father of three and a dual national of the United States and Russia, told the FBI he was cooperating because “I did not think I was doing anything wrong” when he downloaded copies to his personal computer, laptop and to a flash drive.
He told investigators that Goldman Sachs knew he worked on the program from home and said nothing about it previously, according to the court record.
Aleynikov said he had no intention of selling the information or breaking his employment agreement. Aleynikov was arrested at Newark Liberty airport in New Jersey on a flight from Chicago on July 3. On Monday, he was released on $750,000 bail, restricted to New York and New Jersey and ordered to surrender travel documents.
Goldman Sachs has declined to comment on the case. A source familiar with the situation said on Monday that the bank had seen no impact on clients or business.
Of Course! It just dawned on me!
I bet the black box program was ALL ABOUT market manipulation! As in, the whole thing was set-up as a Goldman/Gov’t cooperative project specifically to provide Goldman with a kind of “undeniable” influence over the markets. I mean, it’s been clear for years that Goldman manipulates, and does so unfairly, but I’ve always assumed this was done behind closed doors, “mano y mano” so to speak. I never imagined that they would have software specially designed to essentially just tell the markets what to do. Software that was virtually hard-coded into the various market data-feed systems themselves. But of course, that’s EXACTLY what “They” would do!
And that’s doubtless why someone would risk everything to leak this out to the world. I mean, money’s obviously a big influence as well, but generally this kind of corporate-espionage has a distinctly ideological impetus. If Aleynikov (or whoever) was a chief quant or programmer for this system, chances are he was never on the leash in the first place — it’s unlikely that the talent they’d need would come from within the system. It’s probably been eating away at him to watch what’s happening in the world, day after day, knowing it’s all just a con-game, a charade. I know it ate at me when I first realized it about seven years ago, and that was only by observation.
For anyone with the bucks to back it — not just investment houses, but governments and countries — this thing probably gives almost untraceable power over the US financial markets.
Maybe we’re on the verge returning to a truly “free market” soon. At the very least, it’ll probably be a couple years or more before “They” can incapacitate this thing and cobble-up something new…