According to an affidavit (PDF) filed by the arresting FBI officer and subsequently posted by news media, the programmer, Sergey Aleynikov, copied "proprietary trade code" from his company and uploaded it to a Website in Germany. He later quit his job at the New York firm and moved to a new company in Chicago that "intended to engage in high-volume automated trading" -- and paid him around three times his old salary of $400,000, according to the affidavit.
The financial institution, which is not named in the affidavit, allegedly saw via routine monitoring that Aleynikov's machine was used at least four times to send some 32 megabytes of data to an external site last month. The institution then recovered Aleynikov's bash history -- a record of commands used on his desktop -- to identify his specific actions, the affidavit says.
In a blog, Reuters columnist Matthew Goldstein reported that the New York firm in the affidavit is Goldman Sachs, and that Aleynikov may have stolen the "secret sauce" that has allowed the financial services firm to consistently perform better than many of its competitors. Several other publications have picked up on Goldstein's story, although Goldman Sachs has yet to make a public comment.
The affidavit does not address Goldstein's report, but it does say that "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."
Security experts, meanwhile, are saying that Aleynikov's actions should have been caught before the proprietary data got out. According to the affidavit, the downloads took place during four different sessions, and the data was encrypted before it was uploaded to the German Website. The downloads took place less than a week before Aleynikov announced his resignation. Aleynikov attempted to delete the encryption software and his bash history before transferring the files to his own computers, the affidavit says.
According to Goldstein's blog, Aleynikov told the FBI when he was arrested 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 intended." Aleynikov's attorney reportedly is saying that her client will be proved innocent of the single charge of theft of trade secrets.
Wall Streeters, meanwhile, are wondering what might have been done with the secret software, which may have been available to others for several weeks now. The affidavit does not name the new firm that Aleynikov allegedly was prepared to join, nor does it say who had access to the data on the German site. Some financial experts expressed concern that Goldman Sachs' stock might suffer as a result of the reports, and others said they believe the financial institution in question should disclose the potential security breach and its potential impact on the company's ability to compete in the market.
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