Tags: Lewis | Aleynikov | Goldman Sachs | code

Financial Author Lewis Blasts Goldman Sachs

By    |   Friday, 02 August 2013 07:49 AM

In a new article for Vanity Fair, financial writer Michael Lewis portrays Goldman Sacks as ruthless.

Lewis tells the story of Sergey Aleynikov, a former computer programmer for Goldman Sachs who the bank accused of stealing its proprietary high-frequency trading code.

After telling Goldman Sachs he was leaving for a new job, Alyenikov downloaded from code from Goldman Sachs' server and sent it to himself. He allegedly intended to use it at his new job at high-frequency trading shop Teza Technologies.

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He was convicted in 2010, sentenced to eight years in prison, but later acquitted.

There was a problem with Goldman Sachs' accusation, according to Lewis. The computer code it said was so special was actually open source code to all users. In its typical practice, Goldman Sachs would download open source code, make minor tweaks and then slap its own license on it.

It would never share its changes, the standard practice in the coding community.

Aleynikov had downloaded proprietary code mixed with open source code.

Teza founder and CEO Misha Malyshev testified that his firm was not even interested in Goldman Sachs' code. Instead, he wanted Aleynikov to build his own code from scratch.

"Goldman Sachs' role in the trial was to make genuine understanding even more difficult," Lewis concluded. "Its lawyers coached witnesses; its employees, on the witness stand, behaved more like salesmen for the prosecution than citizens of the state."

Besides criticizing Goldman Sachs, Lewis gives an unfavorable review of the FBI and court trial. The FBI agent who interrogated Aleynikov had no programming background. Everything he knew about the subject came from what Goldman Sachs employees told him.

The trial featured little expert testimony. Few jurors know much about programming, and one witness said half the jury seemed to be sleeping.

"It's not that they lied," Lewis quoted Aleynikov as saying. "But they told things that were not in their expertise."

When his former boss Adam Schlesinger testified that everything at Goldman Sachs is proprietary, Aleynikov said, "I wouldn't say he lied, but he was misunderstood."

In a statement to Vanity Fair, Goldman Sachs said it "Has spent millions of dollars and tens of thousands of hours developing the proprietary source code and technology."

The court had found that the programmer downloaded mostly proprietary code and that it "could be integrated into a competitor's system," Goldman Sachs stated. He had also brought the code to his new employer, the company said.

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In a new article for Vanity Fair, financial writer Michael Lewis portrays Goldman Sacks as ruthless. Lewis tells the story of Sergey Aleynikov, a former computer programmer for Goldman Sachs who the bank accused of stealing its proprietary high-frequency trading code.
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2013-49-02
Friday, 02 August 2013 07:49 AM
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