01:44 PM

Former Goldman Programmer Faces New Charges

Sergey Aleynikov charged with stealing highly confidential software that powers high-frequency trading systems.

A Russian-born computer programmer who formerly worked for Goldman Sachs has rejected a plea deal that would have spared him jail time for allegedly stealing top-secret, high-frequency trading software from the investment firm.

Sergey Aleynikov, 42, was indicted Thursday in New York State criminal court on felony charges of accessing and duplicating "highly confidential" source code from Goldman Sachs, according to the office of Manhattan district attorney Cyrus Vance.

"The code is so highly confidential that it is known in the industry as the firm's 'secret sauce,'" said Vance, in a statement. "Employees who exploit their access to sensitive information should expect to face criminal prosecution in New York State in appropriate cases."

[ A Muslim hacktivist group is targeting U.S. banks. Read more at Muslim Hacktivists Take Credit For U.S. Bank Attack. ]

Aleynikov was previously convicted in federal court on similar charges, but his conviction was overturned by the 2nd Circuit Court of Appeals after he had served a year in jail. Aleynikov's attorney said he plans to seek dismissal of the state charges, which he contends put his client in double jeopardy.

"The precise factual circumstances that underlie these charges have already been fully adjudicated," attorney Kevin Marino told the court, according to Reuters. "There's nothing remotely lawful or constitutional about what's going on … he left Russia for freedom and the American way, and he got Franz Kafka and Goldman Sachs."

Aleynikov holds dual U.S.-Russian citizenship. The programmer joined Goldman Sachs in May 2007 and was paid an annual salary of $400,000, according to records. Formally, he's been charged by Vance's office with one count of unlawful use of secret scientific material, and one count of duplication of computer-related material.

"His job responsibilities included developing and maintaining computer programs used to operate the bank's high-frequency trading systems, which allowed Goldman Sachs traders to make a large volume of trades in securities, commodities, and options," said Vance's office. "Goldman Sachs' programmers created its high-frequency trading system to maintain a competitive advantage."

Aleynikov was first apprehended on the federal charges in 2009, after Goldman Sachs noticed large amounts of data being uploaded from its servers via HTTPS transfers. The uploads, 32 MB in total, were ultimately traced to Aleynikov's workstation, federal authorities charged.

Aleynikov faces up to four years in prison if he is convicted on the state charges.

New York State senior investigative counsel Joanne Y. Li is prosecuting the case under the supervision of assistant district attorney David Szuchman, chief of the Cybercrime and Identity Theft Bureau. Supervising rackets Investigator Robert Muldoon, senior rackets investigator Jason Malone, senior cybercrime analyst Jeremy Apple, and cybercrime analyst Bret Rubin also assisted in the investigation, according to Vance's office.

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User Rank: Ninja
10/3/2012 | 8:14:58 PM
re: Former Goldman Programmer Faces New Charges
That is all good and great but what about the double jeopardy factor? Are they the same charges that he was already cleared of or are they completely separate incidents. IT looks like Aleynikov feels that he will get off scott free, or he would have taken the year in prison as compare dot the 4 he could face if convicted. I wonder what Vance meant when he stated GÇ£"Employees who exploit their access to sensitive information should expect to face criminal prosecution in New York State in appropriate cases.", What are appropriate cases?

Paul Sprague
InformationWeek Contributor
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