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Tuesday, July 7, 2009

Goldman Code Theft

American Scofflaw

Until a few weeks ago, Mr. Aleynikov, 39, was a computer programmer at Goldman, whose prowess in trading has long made it the envy of Wall Street.

But over five days in early June, the authorities say, he stole proprietary, “black box” computer programs that Goldman uses to make lucrative, rapid-fire trades in the financial markets. Their value, experts say, could be incalculable.

Mr. Aleynikov, however, will not get a chance to use those secrets. He was arrested by federal agents on Friday evening, as he got off a plane at Newark Liberty International Airport. He has pleaded not guilty to charges of theft of trade secrets and transporting them abroad.

This is the software that "earns" GS $100 million A DAY by rapid trading of stocks to catch the small up and down transitions. I want to know just WHERE this code was sent, because it is very dangerous. Used widely enough, it will break down the investor market into two groups.

Those who have the software will reap vast sums of money while those who try to trade without it will be driven out of business. Eventually, as the software comes to dominate trading, the actual worth and productivity of public companies will become irrelevant.

Only their volatility will matter and the more volatile their stock is, the faster money can be leached from those companies into the pickets of the program traders.

At the very least this demands a revival of the ban on program trading.
Or possibly day-trading will go extinct and investment will be long-term only, i.e. you buy a stock for a month at a time.

Left unchecked, the escape of this software "into the wild", could mean the end of publicly traded companies entirely!

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