Monday, July 6, 2009

Goldman's Computer Trading Code Stolen

This is big.

Over the July 4th holiday long weekend, a Russian immigrant living in New Jersey and forner Goldman Sachs trader, Sergey Aleynikov, was arrested on federal charges of stealing top-secret computer trading codes from a "financial institution." It's an open secret that the "financial institution" is Goldman Sachs.

The trading code stolen was the platform Goldman uses for its program trading activities. Writes Reuters:

The platform is one of the things that apparently gives Goldman a leg-up over the competition when it comes to rapid-fire trading of stocks and commodities. Federal authorities say the platform quickly processes rapid developments in the markets and uses top secret mathematical formulas to allow the firm to make highly-rofitable automated trades.
This is a multi-million dollar profit center for Goldman and it may have completely destroyed Goldman's edge in this business.

Zero Hedge writes:

This week's NYSE Program Trading report was very odd: not only because program trading hit 48.6% of all NYSE trading, a record high at least since the NYSE keep tabs of this data, and a data point which in itself was startling enough to cause some serious red flags...but what was shocking was the disappearance of the #1 mainstay of complete trading domination (i.e., Goldman Sachs) from not just the aforementioned #1 spot, but the entire complete list. In other words: Goldman went from 1st to N/A in one week.
It's as if someone stole the secret formula for Coca Cola so every kid on every block can make it, and Coca Cola has decided to junk the Coca Cola business.

But Goldman, being Goldman, knows how to get the FBI to hop. Zero Hedge, again:

What is probably most notable, in less than a month since Sergey's departure from [Goldman?], the FBI was summoned to task and the alleged saboteur was arrested and promptly gagged: if anyone is amazed by the unprecedented speed of this investigative process, you are not alone. If only the FBI were to tackle cases of national security and loss of life with the same speed and precision as they confront presumed high-frequency program trading industrial espionage cases... especially those that allegedly involve Goldman Sachs.
Stay tuned.

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