Skip to comments.Court Rules Software Not Protected By Fed Crime Laws, Overturns Conviction of Goldman Engineer
Posted on 04/14/2012 9:55:59 PM PDT by Brad from Tennessee
Before leaving Goldman Sachs to earn a millionaires salary with Chicago High Frequency Trading (HFT) startup Teza Technologies, Sergey Aleynikov made one last transaction. At 5:20pm on his last day, just before his going-away party, Aleynikov uploaded 500,000 lines of encrypted source code from the Wall Street firms proprietary HFT system to a server located in Germany. Following the clandestine upload, Aleynikov deleted the encryption program, wiped his command history, and headed to the party.
Although Aleynikov later managed to download the source code to his home computer in New Jersy before flying to Chicago, he was apprehended by the FBI while returning through Newark Liberty International Airport.
But after his conviction at trial and imprisonment during the appeals process (his dual US-Russian citizenship presented a flight risk), Aleynikov is now a free man.
The reasons why touch the entire software industry. . .
(Excerpt) Read more at techcrunch.com ...
A small time Thief stealing from Big time Thieves. What to do.
HFT is Theft....Plain and simple.
The Chinese spies are gonna be on this like white on rice. It looks like one of the important points is that the software was for in-house use and not a product for sale on its own. There’s a lot of software in any high-tech company, whether it’s a chip designer or an internet start-up, that’s only for internal use.
In what way is trading theft?
HFT is indeed theft, here are some links from zerohedge.com that give the basics of the practice and why it is a crime against business, the stock market, and the individual:
That is an extremely narrow viewpoint. Companies rarely sell or provide their source code. This ruling would seem to open the door to pulling source code for anything, even delivered products. Why? Because the source code - generally just text files on a computer - is rarely if ever delivered. Instead, source code is typically processed through a program called a compiler where it is turned into a stream of instructions for the particular computer it will be running on. (eg. windows based PC, or Mac OS/X PC, Android device, etc.) Source isn't delivered, executable binaries are delivered.
If you don't believe that reasoning, if you take the (reasonable) view that the source is well, the source of the delivered product... Then why this decision? Are not tools that enable the development, compilation, and delivery of the binaries, the delivered product, also protected? This is a tough spot here. Where do you draw the line on delivered/licensed/sold product and that which brings it to market?
The part where they jump in front of everyone Else's trades before they are placed and steal a part of those other peoples trades right off the top. Yes- that is Theft!
Thanks to both of you for the explanations. However, I must point out that, so far at least, no government regulator seems to consider HFT to be a crime.
Indeed. Kinda like the SEC never thought what Bernie Madoff was doing was a crime.
I’m pretty sure you’re trolling.
What defines high frequency?
If I trade 1 hour before you, is that ok?
How about 1 minute? 1 Second? Millisecond? Nanosecond?
I agree that HFT is theft, it may be legalized but it still is... I also have a ‘beef’ with the Market-makers who control where a stocks value goes rather than letting the market decide impersonally.
I’ve been watching a stock lately that has 20 Million shorts against it and the market maker consistently manipulates it to keep the value of the stock from rising. It just one of the reasons why I no longer actively trade. I bought some long term holding and an just going to hold them for a few years.
Maybe it’s not the smartest strategy, but I no longer want to pay fees to brokers that are intent on thrashing the stack market to death.
The don't seem to consider crony-eminent domain a crime either.
“Thanks to both of you for the explanations. However, I must point out that, so far at least, no government regulator seems to consider HFT to be a crime.”
Don’t you know? The regulators are all people who came from places like Goldman Sachs. I am not making that up. It is true and can be verified. Even Ben came from Goldman Sachs. And Turbo tax cheat Timmy(The treasury Secretary) Came from the NY FED, Where he was Good buddies with JPM.
It is a revolving door between the government regulatory agencies and the investment banks. When they leave the SEC or any place like it then they are usually rewarded with a Job back at the banks.
And Congress, The president, Ect... Get millions and Billions in “Contributions” from the big banks. With a system like that then who is going to regulate you.
As a side note. I just found out something new. Timmy is another one that grew up in foreign countries.
You don’t get it. There computers are set up to “PEEK” before the other peoples trades are ever actually executed. And then after they peek then they can still place a trade before you that is based on what your trade is going to be.
It is no Different than in poker when you have a way to see the other guys cards before you place your bet.
Member since April, 2005.
Read my postings of 71 threads, and 10,277 replies (10,278 now); and then tell me how I’m trolling.
You just don't have the several hundred thousand dollars per year to invest to get it.
You gotta pay to play.
Currently? A trade decision (based on some kind of running average or other algo) is made in microseconds.
7: division fallacy, as obvious and deliberate as it gets
11: moving the goalposts
20: composition fallacy
My #8 here is a good start for your question.
Thanks for your help, FReinds - you are correct. I didn’t have a full understanding.
If latency between systems allows someone to see someone else’s trade request and act on it before it is fulfilled, then that ain’t right.
My question remains, but I neglected to go past zero seconds into negative time periods. ;)
Your figure is extremely low ball. And no it is wrong. It is like saying if a gambler can afford a special camera to see through the other players cards then that is OK.
Take Nascar for example. There are rules and limits as to what you can do. If you cheat them and get caught then you are in big trouble. Even though some drivers have the money to cheat if they want to. Some do not. And the rules are to make it reasonably fair to determine who has the best team and driver. Not who has the most money.
In an honest and just society then money should not be able to buy you everything. The only advantage that People like Goldman should have is the fact that they can afford to hire a lot of people to research how to invest.
Rigging the machinery is not a just option.
The bankers and the media which is basically owned by the banks(or those who profit from these kinds of trades) do not want you to see the truth. Because then you would see as you have that it is just plain wrong. And they would stand to loose a lot of ill gained money. It is great that they are not fooling you anymore. Have a great day.
You accused me of trolling (for asking an honest question, which you are apparently only able to answer with ad hominem attacks). The onus is on you to prove I was trolling. You can't — because I wasn't.
(You flatly stated that HFC is a “crime” — a word that has specific legal meaning. I politely pointed out that it's not actually a crime. I never stated any opinion about whether or not it should be a crime — just the bald fact that is is not actually a crime now. For that, you accuse me of trolling. I offered my lengthy track record of non-trolling posts as evidence of my character as a serious poster. You then return with a jumble of names of logical fallacies, from some numbered list you seem to have stashed away somewhere. Who's trolling now?)
It's no more theft than 3 card Monte. HFT is just a faster con.
It's no more theft than 3 card Monte. HFT is just a faster con.
I got those dup posts in in under a nanosecond.
No surprise there. The same guys who own the HFT supercomputers to milk their muppets are the same guys who write the legistlation and regulations and hand them to our "representatives" in D.C. to pass - or not pass - just as long as GS maintains its prefered status.
I think this s an excellent decision, regardless of how the law interfaces with the software industry. Federal commerce power is limited. Perhaps you comments are valid, but this is an issue that should be addressed to state law, not federal. The less federal power the better.
I'm with you there!
Surely there are enough other laws on the books (cue Dr. Ferris) to get a conviction on something - theft of Trade Secrets perhaps, or has this string of charges tripped double-jeopardy?
The court may be using this case to spur Congress into clarifying the statutes so this specific activity is illegal.