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Ex-Goldman Sachs coder cuffed on fresh 'source theft' charges

Programmer cleared of wrongdoing faces new charges

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A Goldman Sachs programmer cleared six months ago of stealing the source code to the bank’s high-frequency trading system has been re-arrested and charged.

The Manhattan district attorney has now accused Sergey Aleynikov, 42, of unlawfully using secret scientific material and unlawfully duplicating computer-related material.

In February Aleynikov overturned a conviction on federal charges that claimed he stole trade secrets from his employer, mega-bank Goldman Sachs. During the appeal hearing, his lawyer Kevin Marino argued Aleynikov had been incorrectly charged under the Economic Espionage Act (EEA).

The appeals court ruled in Aleynikov's favour, finding that taking source code is not a crime under federal law, which instead makes it illegal to steal trade secrets, and that the code didn’t qualify as stolen goods under another federal law.

Aleynikov, a naturalized US citizen from Russia, worked for Goldman Sachs between 2007 and 2009, and built software that takes advantage of small arbitrage opportunities in stock prices by placing millions of trades in a matter of seconds.

Aleynikov was recruited by trading firm Teza Technologies to develop similar high-frequency trading software and he gave notice to Goldman Sachs in April 2009.

The NY state complaint alleges Aleynikov transferred “hundreds of thousands of lines of source code for Goldman Sachs’ high-frequency trading system to a foreign server; that code included trading algorithms used to determine the value of stock options".

In the original case, brought by the US government in 2009, Aleynikov said he thought he was only taking open-source code, and hadn’t realised any proprietary code was included. That defence was rejected by the trial judge and Aleynikov was sentenced in December 2010 to eight years in prison, with three under supervised release and a $12,500 fine.

Commenting on the latest charges, DA Cyrus Vance said on Thursday: “This code is so highly confidential that it is known in the industry as the firm’s ‘secret sauce'… employees who exploit their access to sensitive information should expect to face criminal prosecution in New York State in appropriate cases." ®

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