The story states "Aleynikov?s alleged theft
poses a risk to U.S. markets." This is very
true. A program such as this controls
microsecond level program trades. However this
also begs the conclusion that Goldman Sachs
have themselves used this very program to
manipulate the markets and on a massive basis.
Evidence? None yet. But it is a curious
coincidence that the NYSE stopped reporting GS
program trades this week. Then there was that
hanky panky where they bought bad mortgages and
used program trading to short their own bad
deals. They made money no matter what. It's
probably a good thing this software was stolen
so we can finally stop hedge fund trading.
Goldman Sachs is a master at gauging risk. It managed to get out of toxic mortgages before they unraveled and shorted them on the way down. We detailed in a lengthy case study the approach to managing risk and the systems and processes behind Goldman. The one risk Goldman didn’t count on: Worker espionage.
On July 4, a criminal complaint was filed against Sergey Aleynikov, an ex-Goldman Sachs computer programmer, who allegedly tried to steal the code behind Goldman Sachs’ proprietary trading systems.
That’s the equivalent of stealing the algorithm behind Google’s search.
According to Bloomberg, Goldman may lose millions over the stolen code. Bloomberg reports:
At a court appearance July 4 in Manhattan, Assistant U.S. Attorney Joseph Facciponti told a federal judge that Aleynikov’s alleged theft poses a risk to U.S. markets. Aleynikov transferred the code, which is 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.
Aleynikov’s attorneys note that the IT worker didn’t disseminate the code. Aleynikov started at a trading software outfit called Teza Technologies. He has been suspended.
The lesson here is the same one that has been repeated for as long as I can remember: The biggest threat to your systems (and business) often comes from within. Button down those IT security processes.
