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Goldman: Pwned?
#1
Oh oh..... Insane major props to Zerohedge on this one!
Back-up: 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 as I jaunt from village to village in what little is left of Europe's bison country, 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.
What? Was NYSE/Euronext suddenly "asked" to remove Goldman from the prop trading reports? Or is something else going on, as Zerohedge and Reuters apparently have managed to scoop:
While most in the United States were celebrating the Fourth of July holiday, a Russian immigrant living in New Jersey was being held on federal charges of stealing secret computer trading codes from a major New York-based financial institution. Authorities did not identify the firm, but sources say that institution is none other than Goldman Sachs.
The charges, if proven, are significant because the codes that the accused, Sergey Aleynikov, tried to steal are the secret sauce to Goldman's automated stock and commodities trading business. Federal authorities contend the computer codes and related-trading files that Aleynikov uploaded to a German-based website help this major financial institution generate millions of dollars in profits each year.
Oh this is bad for Goldman if true.
It's even worse for the NYSE however, as Reuters goes on to explain:
The case against Aleynikov may explain why the New York Stock Exchange moved quickly last week to stop reporting program stock trading for its most active firms. Goldman was often at the top of the chart -- far ahead of its competitors. It's possible Goldman had asked the NYSE to stop reporting the number after it discovered that someone may have infiltrated the proprietary computer codes it uses.
And yet here's the problem - there's a SEC issue here, in that this most certainly is a material issue related to the firm's prospects and thus under the rules is supposed to be disseminated, at minimum when the request was made to the NYSE to suspend their reporting - if the request was made.
The next obvious question is "who was the firm in Chicago that this guy was going over to work for?"
This is pretty amazing stuff folks.
Industrial espionage is nothing new of course. Firms try to "hire away" important employees all the time, and frequently what they want is what's in someone's brain - employment agreement be damned. There is often years of litigation that comes out of this; as can be imagined its damn hard to own someone's head or there contents thereof, at least in a way you can defend in court. Limited non-competes and such are routinely upheld but often the damage is done by the time the suit is filed.
What's more-clear is when someone makes off with software, a customer list or otherwise clearly-identifyable work product that can be traced to its owners. That's blatantly unlawful and yet it can be tremendously profitable - if you get away with it.
What's surprising here is that the FBI got involved so quickly - or at all. These sorts of cases are almost always civil in nature; while there is nearly always a criminal offense embedded in there somewhere (computer tampering, transportation of stolen property, etc.) it is relatively rare for the FBI to give a damn.
Well give a damn they did this time, and the affidavit that Zerohedge has makes clear what they claim they've got this guy cold on - the "bash history" file they're referring to is a Unix system log that the "shell", or command interpreter, automatically keeps. Said alleged offender apparently was aware of this file and tried to erase it after doing his deed, but was unaware that the system he was working on had auditing enabled (oops.)
The bad news for Goldman though is that if this code is now in the hands of who knows how many other people, what sort of fun could ensue by knowing how Goldman is analyzing the markets?
This could be kinda fun to watch.... from a distance, of course Smile
http://market-ticker.denninger.net/archi...Pwned.html
"The philosophers have only interpreted the world, in various ways. The point, however, is to change it." Karl Marx

"He would, wouldn't he?" Mandy Rice-Davies. When asked in court whether she knew that Lord Astor had denied having sex with her.

“I think it would be a good idea” Ghandi, when asked about Western Civilisation.
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#2
Victims of their own greed....may they rot in poverty....I'll not shed a tear for any of them. Interesting to keep watch of!
"Let me issue and control a nation's money and I care not who writes the laws. - Mayer Rothschild
"Civil disobedience is not our problem. Our problem is civil obedience! People are obedient in the face of poverty, starvation, stupidity, war, and cruelty. Our problem is that grand thieves are running the country. That's our problem!" - Howard Zinn
"If there is no struggle there is no progress. Power concedes nothing without a demand. It never did and never will" - Frederick Douglass
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#3
Here's Zero Hedge's original post. The affidavit can also be seen at the url:

http://zerohedge.blogspot.com/2009/07/is...trial.html

Quote:Sunday, July 5, 2009
Is A Case Of Quant Trading Sabotage About To Destroy Goldman Sachs?
Posted by Tyler Durden at 5:48 PM

Major developing story: Matt Goldstein over at Reuters may have just broken a story that could spell doom for if not the entire Goldman Sachs program trading group, then at least those who deal with "low latency (microseconds) event-driven market data processing, strategy, and order submissions." Visions of swirling, gray storm clouds over Goldman's SLP and hi-fi traders begin to form.

Back-up: 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 as I jaunt from village to village in what little is left of Europe's bison country, 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.


Even more odd, this "disappearance" comes hot on the heels of what Zero Hedge reported could be potentially a major change to the way the NYSE provides its weekly program trading report. Of course, Ray over at the NYSE immediately replied to Zero Hedge that all was going to be same as always ... Odd, maybe he meant that all is back to normal except the reporting of Goldman's trades. Either way, it might very well be time for proactive readers to again contact the two employees publicly disclosed by the NYSE as lead-contacts on the issue. Readers will recall that it was these same two who were previously steadfastly assuring anyone who would listen that there would be no change at all in data reporting.

Robert Airo, Senior Vice President, NYSE Euronext at (212) 656-5663 or
Aleksandra Radakovic, Vice President, NYSE Regulation at (212) 656-4144

Alas, the just released weekly data proves that either theirs was a material misrepresentation of facts, or Goldman simply suddenly decided to stop transacting with the NYSE, or, what would be even more sinister, Goldman notified the NYSE to scrap all their trading data from the prior week. Why would they do that?

Going back to Matt Goldstein's story. In a nutshell, on Friday, one Sergey Aleynikov was arrested at Newark airport by FBI agents, as he was coming back from a trip to Chicago (maybe visiting his new employer), on what are basically industrial espionage charges. Sergey, or Serge as his Linked-In account identifies him, was VP of equity strategy over at 85 Broad (or maybe 1 New York Plaza, his detailed Bloomberg Bio page has disappeared) had the following responsibilities at Goldman Sachs according to Linked-In:

• Lead development of a distributed real-time co-located high-frequency trading (HFT) platform.The main objective was to engineer a very low latency (microseconds) event-driven market data processing, strategy, and order submission engine. The system was obtaining multicast market data from Nasdaq, Arca/NYSE, CME and running trading algorithms with low latency requirements responsive to changes in market conditions.
• Implemented a real-time monitoring solution for the distributed trading system using a combination of technologies (SNMP, Erlang/OTP, boost, ACE, TibcoRV, real-time distributed replicated database, etc) to monitor load and health of trading processes in the mother-ship and co-located sites so that trading decisions can be prioritized based on congestion and queuing delays.
• Responsible for development of real-time market feed handlers, order processing engines and trading tools at a Quantitative Equity Trading revenue-making HFT desk.

If the allegations are true, it looks like Goldman's hi-fi quant trading desk was thoroughly penetrated by a "spy", and as readers will recall, Serge(y)'s description of his job duties mirrors what Mr. Ed Canaday conveniently provided to Zero Hedge as a description of Goldman's SLP program. (Sources connected with the office of the United States Attorney have confirmed to Zero Hedge that Aleynikov was at one time or another a Goldman employee.").

The plot thickens: per FBI agent Michael McSwain's sworn deposition, Sergey quit a firm described as "Financial Institution" in the affidavit, which according to circumstantial evidence and according to Goldstein is none other than Goldman Sachs, on June 5, at that time earning $400,000 annually. As Matt reports, he proceeded to move to a Chicago firm engaged in "high volume automated trading" where he would make 3x his $400k salary (Hey Getco, is it time for a formal release at least denying you guys had anything to do with this, cause if you did it might not look that hot. No matter, we have reached out to our sources in law enforcement to confirm or deny Getco's, and Goldman's, involvement: once we get a response we will immediately advise our readers).
In the 5 days immediately preceeding his departure from "Financial Institution" (potentially GS), Sergey allegedly downloaded 32 megs of ultra top-secret quant trading proprietary code, that, according to Special Agent McSwain's affidavit, he then proceeded to encrypt and upload to a website in Germany, with a UK owner. One can only imagine the value of this "code" not only to Goldman but to the highest bidder. After all, from the affidavit: "certain features of the [code], such as speed and efficiency by which it obtains and processes market data, gives the Financial Institution a competitive advantage among other firms that also engage in high-volume automated trading.The Financial Institution further believes that, if competing firms were to obtain the [code] and use its features, the Financial Institution's ability to profit from the [code]'s speed and efficiency would be significantly diminished." Needless to say, many others are now also likely hot on the trail of the code.

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.

Now the real question here is, does [GS?] feel lucky? Because the code has supposedly been in the hands of an outsider for over a month, one might suspect that anyone who wanted to has had ample opportunity - if the holder(s) wished to sell... Would that have anything to do with the even weirder than usual market action over the past 2-3 weeks: after all it is the very Goldman Sachs (which may or may not be the target of this program trading industrial espionage) which is the primary SLP on the world's biggest stock exchange.

Another major question: do Goldman and the NYSE not have a fiduciary responsibility to announce to both shareholders and any interested parties if there has been a major security breach in their trading operations? Certainly this seems like a material piece of information: given that program trading accounted for 49% of all NYSE trading last week, and Goldman as recently as one week ago represented about 60% of all principal program trading, will this be called an issue threatening the National Security of the United States. Shouldn't all market participants be aware that there is some rogue code in cyberspace that can be abused by the highest bidder, who very likely will not be interested in proving the efficient market hypothesis? What will happened when said bidder goes about trying to front run none other than the "Financial Institution" [GS]?

The complete affidavit can be downloaded from this post here, and is also provided Scribed below as this could (and likely should) become a matter of National Security. Zero Hedge will closely monitor this situation from the European hinterland and provide updates as they come. For really interested readers, we recommend tracking any potentially new developments on the forums and message boards over at Wilmott.
"It means this War was never political at all, the politics was all theatre, all just to keep the people distracted...."
"Proverbs for Paranoids 4: You hide, They seek."
"They are in Love. Fuck the War."

Gravity's Rainbow, Thomas Pynchon

"Ccollanan Pachacamac ricuy auccacunac yahuarniy hichascancuta."
The last words of the last Inka, Tupac Amaru, led to the gallows by men of god & dogs of war
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#4
Lots of speculation about whether this is:

a) linked to major "technical problems" at the NYSE last week;

b) a limited hangout by Goldman to cover their tracks about something much more major;

c) such as allegations that their source code may have enabled them to "front run" their own customers/investors, as per earlier suggestions by Zero Hedge;

d) finally, that this is pure diversion, basic magick, to prevent us looking at something fundamental, possibly fatal and so corrupt that there's no coming back...

a) to d) are not mutually exclusive.
"It means this War was never political at all, the politics was all theatre, all just to keep the people distracted...."
"Proverbs for Paranoids 4: You hide, They seek."
"They are in Love. Fuck the War."

Gravity's Rainbow, Thomas Pynchon

"Ccollanan Pachacamac ricuy auccacunac yahuarniy hichascancuta."
The last words of the last Inka, Tupac Amaru, led to the gallows by men of god & dogs of war
Reply
#5
Jan Klimkowski Wrote:Lots of speculation about whether this is:

a) linked to major "technical problems" at the NYSE last week;

b) a limited hangout by Goldman to cover their tracks about something much more major;

c) such as allegations that their source code may have enabled them to "front run" their own customers/investors, as per earlier suggestions by Zero Hedge;

d) finally, that this is pure diversion, basic magick, to prevent us looking at something fundamental, possibly fatal and so corrupt that there's no coming back...

a) to d) are not mutually exclusive.

Jan, One HEAVY set of possibilities!.....none of them give one a reason to smile [or have much hope], even though it is summer....damn the corporate fascists...can't they even take a summer break!....
"Let me issue and control a nation's money and I care not who writes the laws. - Mayer Rothschild
"Civil disobedience is not our problem. Our problem is civil obedience! People are obedient in the face of poverty, starvation, stupidity, war, and cruelty. Our problem is that grand thieves are running the country. That's our problem!" - Howard Zinn
"If there is no struggle there is no progress. Power concedes nothing without a demand. It never did and never will" - Frederick Douglass
Reply
#6
This thread needs to be viewed in the light of post #6 here:

http://www.deeppoliticsforum.com/forums/...php?t=1703

Particularly Zero Hedge's article entitled "NYSE Halts Transparency, Feels Goldman Program Trading Disclosure Is Unnecessary".

As Zero Hedge states, in the secret, covert, world of programmed trading:
Quote:
Quote: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 as I jaunt from village to village in what little is left of Europe's bison country, 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.

Did the NYSE pull the plug and remove transparency to protect Goldman's ass?

Or because Goldman had pulled out of programmed trading because their source code was a) stolen, or more damagingly to GS, about to exposed as b) corrupt (perhaps for reasons of "front running" its own customers)?

Next question.

What precisely is Goldman Sachs' Supplemental Liquidity Program?

See Zero Hedge here:

http://www.zerohedge.com/article/goldman...n-shares-0

If it is precisely this quant-based, programmed trading, that has been exposed/terminated/pulled, what are the implications for the sham edifices of global financial markets?

Transparency? Toilet

Liquidity? Viking

The smoke and mirrors game of pass the toxic parcels holding the global financial system together? :eek:
"It means this War was never political at all, the politics was all theatre, all just to keep the people distracted...."
"Proverbs for Paranoids 4: You hide, They seek."
"They are in Love. Fuck the War."

Gravity's Rainbow, Thomas Pynchon

"Ccollanan Pachacamac ricuy auccacunac yahuarniy hichascancuta."
The last words of the last Inka, Tupac Amaru, led to the gallows by men of god & dogs of war
Reply
#7
http://www.computerworld.com/action/arti...Id=9135216
Programmer steals Wall Street trading code, FBI alleges
Sources confirm Sergey Aleynikov worked at Goldman Sachs
Gregg Keizer


July 6, 2009 (Computerworld) A high-level developer for Goldman Sachs
was arrested by the FBI Friday and charged with stealing computer code
that automates the firm's high-volume trading on stock and commodities
markets, according to court documents and sources close to the case.

The Reuters news service, which broke the story yesterday, tied the
developer, Sergey Aleynikov, to Goldman Sachs, where he was allegedly a
vice president of equity strategy.

Today, sources with knowledge of the case confirmed that Aleynikov had
worked for Goldman Sachs for the last two years, and allegedly tried to
steal code from the company.

In the days before his June 5 resignation from Goldman Sachs, Aleynikov
copied, encrypted and transferred approximately 32MB of proprietary code
to a server located in Germany, the FBI claimed in the complaint filed
July 4 by Special Agent Michael McSwain, a member of the agency's
securities fraud squad.

Aleynikov resigned to take a job with a new company "that intended to
engage in high-volume automated trading," for triple his $400,000
salary, the complaint said.

McSwain spelled out four data transfers from Aleynikov's workstation --
both locally and remotely -- on June 1, June 4 and June 5, then tied the
dates and times to Aleynikov's use of his keycard to access the office,
or logging in remotely from his home computer.

Aleynikov tried to cover his tracks, alleged McSwain. "The program used
to encrypt the files was then erased," the FBI agent swore in the
complaint. "An attempt was also made to erase the bash history, which
was unsuccessful, because of a feature of the Financial Institution's
computer system that retains a back-up copy of each user's bash history."

A "bash history" is a log of the most-recently-executed commands by a
user on a Unix-based operating system.

The FBI arrested Aleynikov late Friday night at the Newark Airport, and
charged him with theft of trade secrets and transporting stolen property.

The complaint said that Aleynikov had made a statement after his arrest,
admitting that he had copied and encrypted files from his company's
servers, then transferred them to the remote server, deleted the
encryption software and attempted to erase the bash history. "Aleynikov
claimed, however, that he only intended to collect 'open source' files
on which he had worked, but later realized that he had obtained more
files than he had intended," McSwain said.

Before sources confirmed that Aleynikov worked for Goldman Sachs,
Reuters had used facts in the FBI's complaint to match a LinkedIn
profile for someone named "Serge Aleynikov," including his May 2007
start date and the description of his job. In the complaint, for
example, McSwain said Aleynikov worked as a computer programmer on a
platform that "allows the Financial Institution to engage in
sophisticated, high-speed, and high-volume trades on various stocks and
commodities markets."

In the LinkedIn profile, meanwhile, Aleynikov notes his position with
Goldman Sachs and says he "lead development of a distributed real-time
co-located high-frequency trading (HFT) platform" at the firm.

As of 2:30 p.m. ET Monday, Aleynikov was still being held in federal
custody, pending bail. A Saturday hearing had set bail at $750,000, and
placed both travel restrictions and computer access limitations on him
assuming he posts a bond. A spokeswoman for the U.S. Attorney in the
Southern District of New York declined to comment further on the case.

Goldman Sachs also declined to comment today.
"The philosophers have only interpreted the world, in various ways. The point, however, is to change it." Karl Marx

"He would, wouldn't he?" Mandy Rice-Davies. When asked in court whether she knew that Lord Astor had denied having sex with her.

“I think it would be a good idea” Ghandi, when asked about Western Civilisation.
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#8
I'm loving this...[URL="http://www.bloomberg.com/apps/news?pid=20601087&sid=ajIMch.ErnD4"]
[/URL]
[URL="http://www.bloomberg.com/apps/news?pid=20601087&sid=ajIMch.ErnD4"]
[/URL]
One has to wonder....
“The bank has raised the possibility that there is a danger that somebody who knew how to use this program could use it to manipulate markets in unfair ways,” Facciponti said, according to a recording of the hearing made public today. “The copy in Germany is still out there, and we at this time do not know who else has access to it.”
Uhhhhhhhhh.....
Let's see.... so someone who knows how to use this program can use it to manipulate markets can they?
Is that manipulation "in fair ways" if Goldman uses it, but "unfair ways' if someone other than Goldman uses it?
That seems to be a rather different claim than this:
July 6 (Bloomberg) -- Goldman Sachs Group Inc. may lose its investment in a proprietary trading code and millions of dollars from increased competition if software allegedly stolen by a former employee gets into the wrong hands, a prosecutor said.
Well of course. That's what these sorts of cases are usually about. Someone misappropriates some trade secret material and by using it they would give someone the same advantages in a marketplace that the rightful owner (who spent plenty to develop it) has.
But that's not market manipulation, is it?
Once again, the claim made in open court:
“The bank has raised the possibility that there is a danger that somebody who knew how to use this program could use it to manipulate markets in unfair ways,” Facciponti said, according to a recording of the hearing made public today.
Did Assistant US Attorney Facciponti make an erroneous statement, or did he just lay a nuclear egg on the table, step back, and set it off - on accident - admitting in open court that the software in question "can be used to manipulate markets"?
Inquiring minds would like to know.
http://market-ticker.denninger.net/archi...ldman.html
"The philosophers have only interpreted the world, in various ways. The point, however, is to change it." Karl Marx

"He would, wouldn't he?" Mandy Rice-Davies. When asked in court whether she knew that Lord Astor had denied having sex with her.

“I think it would be a good idea” Ghandi, when asked about Western Civilisation.
Reply
#9
Yup - that lawyer let the proverbial cat out of the bag, and the quote cannot be repeated too many times:

Quote:“The bank has raised the possibility that there is a danger that somebody who knew how to use this program could use it to manipulate markets in unfair ways,” Facciponti said, according to a recording of the hearing made public today.

Meanwhile, here's a speculative piece. Was Goldman using its Supplemental Liquidity Program and alleged PPT leadership role to not only screw their customers and financial markets, but Uncle Sam as well?

Quote:Goldman Sachs and the Code of Gold
July 6, 2009, 3:50PM

Plunge Protection Team [1]

Let me start by explaining the background and the purpose of the Plunge Protection Team

Oct. 19, 1987,the Dow Jones industrial average dropped 508 points, or 22.6 percent, in the biggest one-day loss in history,it was called "Black Monday". Shock waves reverberated from Wall Street all the way to Capitol Hill and phones began to ring off the wall. Discussions, cussins and repercussions reached a consensus, a plan was needed to forestall such emergencies as this.Central bankers and financial regulators came up with the idea of the Working Group. In the end the group was established by Executive Order 12631,signed on March 18, 1988 by United States P, resident Ronald Reagan. These quiet meetings of the Working Group are the financial world's equivalent of the war room. It was informally known as the "Plunge Protection Team." It is supposed to work like this......



In the event of a financial crisis, each federal agency with a seat at the table of the Working Group has a confidential plan. At the SEC, for example, the plan is called the "red book" because of the color of its cover. It is officially known as the Executive Directory for Market Contingencies. The major U.S. stock markets have copies of the commission's plan as well as the CFTC's.The red book is intended to make sure that no matter what the time of day, SEC officials can reach their opposite numbers at other agencies of the U.S. government, with foreign governments, at the various stock, bond and commodity futures and options exchanges, as well as executives of the many payment and settlement systems underlying the financial markets.

The Working Group's main goal, officials say, would be to keep the markets operating in the event of a sudden, stomach-churning plunge in stock prices -- and to prevent a panicky run on banks, brokerage firms and mutual funds. The worry is that if investors all tried to head for the exit at the same time, there wouldn't be enough room -- or in financial terms, liquidity -- for them all to get through. In that event, the smoothly running global financial machine would begin to lock up like a motor without oil.This sort of liquidity crisis could imperil even healthy financial institutions that are temporarily short of cash or tradable assets such as U.S. Treasury securities.

One of their ideas that was approved by the SEC was "circuit breakers" that would give investors timeouts to calm down.Under the SEC's rules, a drop of 350 points in the Dow would trigger the circuit breaker and bring a 30-minute halt in NYSE trading. If the Dow declined another 200 points, trading would cease for one hour. No additional circuit breakers would operate that day, but a new set would apply the next trading day.

That all sounds hunky dory doesn't it, and it should be, but I hear a knock in the engine,so lets raise the hood.

Financial writers for British newspapers The Observer and The Daily Telegraph, along with U.S. Congressman Ron Paul and writers Kevin Phillips (who claims "no personal firsthand knowledge" and is "not interested in becoming a conspiracy investigator") and John Crudele have charged that the Working Group has gone beyond their legal mandate. That the the Working Group is an orchestrated mechanism that attempts to manipulate U.S. stock markets in the event of a market crash by using government funds to buy stocks, or other instruments such as stock index futures--acts which are forbidden by law. Former Federal Reserve Board member Robert Heller, in the Wall Street Journal, speculated that "Instead of flooding the entire economy with liquidity, and thereby increasing the danger of inflation, the Fed could support the stock market directly by buying market averages in the futures market, thereby stabilizing the market as a whole." which makes one wonder if in fact he was merely speculating or revealing what had already been happening [2]

Whats that burning smell, is that smoke? The permanent members of the Plunge Protection Team read like who's who of the financial realm and what worries me is that we already know from Matt Tabbi's article in RollingStone "The Great American Bubble Machine" that this realm is populated by Goldmen Sachs Alumni. [3]

A couple of months ago, we also learned through Zero Hedge [4] that Goldman had profited greatly from a sweetheart deal with the federal government concerning a new program instituted by the Feds known as "The Supplemental Liquidity Provider" Program ("SLP"), launched while we were all eating Turkey last Thanksgiving. It is supposed to provide "market liquidity" (i.e.: an ongoing, active market) for selected groups of 500 different NYSE stocks per SLP participant. The problem is as Durden pointed out to all who were interested, it certainly appeared to him that Goldman was the only active participant in the program.

We also learned from Bloomberg [5] that as of April, Goldman-Sachs had reaped the benefits of more $100 million-plus days of trading revenue than it had in the history of its business, wow ! How did they do that?

What many may not know is the fact that Goldman is at the heart of the government's Plunge Protection Team, a/k/a the "President's Working Group On Financial Markets," (thus making this a matter of so-called national security.) So you see there is the possibility that Goldman could have easily been "frontrunning" the rest of the market using their exceptionally fast proprietary computer program, or code as it is called, identifying others' market-making trades and strategies, then acting upon them for Goldman's own benefit, instead of reporting to the PPT , and executing in-house trades before the third-parties' trades were even concluded. So the Code may explain their extroidinary fortune lately. Ah, but trouble comes knocking.

July 5 (Reuters) [6]- Did someone try to steal Goldman Sachs' secret sauce?
While most in the United States were celebrating the Fourth of July holiday, a Russian immigrant living in New Jersey was being held on federal charges of stealing secret computer trading codes from a major New York-based financial institution. Authorities did not identify the firm, but sources say that institution is none other than Goldman Sachs.

The charges, if proven, are significant because the codes that the accused, Sergey Aleynikov, tried to steal are the secret sauce to Goldman's automated stock and commodities trading business. Federal authorities contend the computer codes and related-trading files that Aleynikov uploaded to a German-based website help this major financial institution generate millions of dollars in profits each year.The platform is one of the things that gives Goldman an advantage over the competition when it comes to the rapid-fire trading of stocks and commodities. Federal authorities say the platform quickly processes rapid developments in the markets and using secret mathematical formulas, allows the firm to make highly-profitable automated trades. (and maybe pre-emptive ones at that)

In a nutshell, on Friday, one Sergey Aleynikov was arrested at Newark airport by FBI agents, as he was coming back from a trip to Chicago (maybe visiting his new employer), on what are basically industrial espionage charges. If the allegations are true, it looks like Goldman's hi-fi quant trading desk was thoroughly penetrated by a "spy", and Sergey's description of his job duties mirrors what Mr. Ed Canaday conveniently provided to Zero Hedge as a description of Goldman's SLP program. (Sources connected with the office of the United States Attorney have confirmed to Zero Hedge that Aleynikov was at one time or another a Goldman employee.").

The plot thickens: per FBI agent Michael McSwain's sworn deposition, Sergey quit a firm described as "Financial Institution" in the affidavit, which according to circumstantial evidence and according to Goldstein is none other than Goldman Sachs, on June 5, at that time earning $400,000 annually. As Goldstein reports, he proceeded to move to a Chicago firm engaged in "high volume automated trading" where he would make 3x his $400k salary.

In the 5 days immediately preceeding his departure from "Financial Institution" (potentially GS), Sergey allegedly downloaded 32 megs of ultra top-secret quant trading proprietary code, that, according to Special Agent McSwain's affidavit, he then proceeded to encrypt and upload to a website in Germany, with a UK owner. One can only imagine the value of this "code" not only to Goldman but to the highest bidder. After all, from the affidavit: "certain features of the [code], such as speed and efficiency by which it obtains and processes market data, gives the Financial Institution a competitive advantage among other firms that also engage in high-volume automated trading.The Financial Institution further believes that, if competing firms were to obtain the [code] and use its features, the Financial Institution's ability to profit from the [code]'s speed and efficiency would be significantly diminished." Needless to say, many others are now also likely hot on the trail of the code.

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.

Now the real question here is, does [GS?] feel lucky? Because the code has supposedly been in the hands of an outsider for over a month, one might suspect that if the code was for sale anyone who wanted to has had ample opportunity to buy it. Would that have anything to do with the even weirder than usual market action over the past 2-3 weeks. After all under such a scenario Goldman Sachs would lose it's advantage and Goldman Sachs is the primary SLP on the world's biggest stock exchange.

So now is the question in the air is, has Goldman Sachs lost it's secret computer program, its code? Is the curtain being pulled back to reveal the inner workings of Goldman Sachs or will this all conveniently disappear ?

sources
[1] Plunge protection team
[2] Wiki-the working group
[3] rollingstoe-great american bubble machine
[4] Zero Hedge Blog
[5] Bloomberg.com
[6] reuters-secret sauce
http://tpmcafe.talkingpointsmemo.com/tal...ef=reccafe
"It means this War was never political at all, the politics was all theatre, all just to keep the people distracted...."
"Proverbs for Paranoids 4: You hide, They seek."
"They are in Love. Fuck the War."

Gravity's Rainbow, Thomas Pynchon

"Ccollanan Pachacamac ricuy auccacunac yahuarniy hichascancuta."
The last words of the last Inka, Tupac Amaru, led to the gallows by men of god & dogs of war
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#10
Goldman's Lucas van Praag:

Quote:We reject the assertion that we are inflators of bubbles and profiteers in busts, and we are painfully conscious of the importance of being a force for good.

US Attorney articulating the reasons why Goldman wants its code back:

Quote:“The bank has raised the possibility that there is a danger that somebody who knew how to use this program could use it to manipulate markets in unfair ways,” Facciponti said, according to a recording of the hearing made public today.

Party

Stupido question: Where are the cops?
"It means this War was never political at all, the politics was all theatre, all just to keep the people distracted...."
"Proverbs for Paranoids 4: You hide, They seek."
"They are in Love. Fuck the War."

Gravity's Rainbow, Thomas Pynchon

"Ccollanan Pachacamac ricuy auccacunac yahuarniy hichascancuta."
The last words of the last Inka, Tupac Amaru, led to the gallows by men of god & dogs of war
Reply


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