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Former Goldman Sachs Computer Programmer Charged with Theft of Computer Secrets

LawFuel.com Legal Newswire –
PREET BHARARA, the United States Attorney for the
Southern District of New York, and JOSEPH M. DEMAREST, JR., the
Assistant Director in Charge of the New York Field Division of
the Federal Bureau of Investigation (“FBI”), announced that
SERGEY ALEYNIKOV was indicted today on charges related to his
theft of proprietary computer code concerning a high-frequency
trading platform from his former employer, Goldman Sachs.
ALEYNIKOV was previously arrested and is expected to be arraigned
in Manhattan federal court at a later date.
According to the Indictment filed today in Manhattan
federal court:
From May 2007 to June 2009, 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. Goldman Sachs had
obtained the high-frequency trading system in 1999, when it
acquired Hull Trading Company, the previous owners of the system,
for approximately $500 million. Since acquiring the system,
Goldman Sachs modified and maintained the system, and 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. Goldman Sachs’ high
frequency trading system generates millions of dollars per year
in profits for the firm. Goldman Sachs takes several measures to
protect the system’s source code, including requiring all Goldman
employees to agree to a confidentiality agreement.

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. ALEYNIKOV’s last day of
employment at Goldman Sachs was June 5, 2009.
Beginning at approximately 5:20 p.m. on June 5, 2009 —
ALEYNIKOV’s last day working at Goldman Sachs — ALEYNIKOV, from
his desk at Goldman Sachs, transferred substantial portions of
Goldman Sachs’s proprietary computer code for its trading
platform to an outside computer server in Germany. ALEYNIKOV
encrypted the files and transferred them over the Internet
without informing Goldman Sachs. After transferring the files,
ALEYNIKOV deleted the p

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