Ex-Worker Said to Steal Goldman Code (or nobody but GS is allowed to manipulate the market?)

[D-Mack]

Ex-Worker Said to Steal Goldman Code

By GRAHAM BOWLEY
Published: July 6, 2009

He is no John Dillinger, no public enemy No. 1. But Sergey Aleynikov nonetheless masterminded a dazzling bank theft, the authorities say, and he did it without brandishing a gun or cracking a vault.

Instead, he cracked — or, rather, hacked — the secrets of Goldman Sachs, according to federal agents.

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.

...

“The bank has raised the possibility that there is a danger that somebody who knew how to use this program could use it to manipulate markets in unfair ways,” Mr. Facciponti said in the court, according to Bloomberg. “The copy in Germany is still out there, and we at this time do not know who else has access to it.”

http://www.nytimes.com/2009/07/07/bu...07goldman.html

[ThePythonicCow]

Re: Ex-Worker Said to Steal Goldman Code (or nobody but GS is allowed to manipulate the market?)

As D-Mack likely knows (he started the thread, though on another subject) there is more detail and comment on this alleged theft by Aleynikov of Goldman Sachs code on the iTulip thread Taibbi: NYSE ends transparency to protect Goldman Sachs.

[blazespinnaker]

Re: Ex-Worker Said to Steal Goldman Code (or nobody but GS is allowed to manipulate the market?)

Anyone following this on Zero Hedge? It's totally insane. Goldman sachs spent millions upon millions to develop this and bases their entire biz model on it .. and yet, developers are allowed to FTP it to anywhere they want???

wtf?

[ThePythonicCow]

Re: Ex-Worker Said to Steal Goldman Code (or nobody but GS is allowed to manipulate the market?)

Anyone following this on Zero Hedge? It's totally insane. Goldman sachs spent millions upon millions to develop this and bases their entire biz model on it .. and yet, developers are allowed to FTP it to anywhere they want???

wtf?

(Very) minor technicality -- the alleged thief had to https it, because ftp wasn't allowed.

See my comments on that other iTulip thread I linked to above for the various reasons why I am not worried that this will have any impact on Goldman Sachs business ... or maybe I should have said "not hopeful :rolleyes:".

[robert94109]

Re: Ex-Worker Said to Steal Goldman Code (or nobody but GS is allowed to manipulate the market?)

This story is not over. How the code worked is coming out.

"...GS, through access to the system as a result of their special gov't perks, was/is able to read the data on trades before it's committed, and place their own buys or sells accordingly in that brief moment, thus allowing them to essentially steal buttloads of money every day from the rest of the punters world."

http://market-ticker.denninger.net/a...BOMBSHELL.html

[ThePythonicCow]

Re: Ex-Worker Said to Steal Goldman Code (or nobody but GS is allowed to manipulate the market?)

This story is not over. How the code worked is coming out.

Interesting.

Denninger's Unix network sniffing speculations are pure speculation. Yes, one can sniff networks with Unix. One can even do it with Windows, DOS or other operating systems, with a little more work. I doubt that's exactly what this code did exactly, but I really don't know. For one thing, the latencies on normal user level Unix network sniffing are too high for this application. However those details don't really matter. Karl D is just trying to buff his "I can spell Unix too" bonafides where it matters not.

Two things do show up here, however. Karl suspects that this code, as written, is not directly useable to others because others don't have that kind of tight inside network access that Goldman Sachs does. This much is consistent with what I suspected before; no one else could just take this code and plug it in and run serious money with it. The other guy would lack the hooks to get either transaction data streams out of the exchanges or the resulting trading orders back into the stock exchanges with the necessary volumes and low latencies, and they could not trade at the volumes Goldman Sachs trades without raising serious suspicions.

But the second thing Karl Denninger points out I hadn't really considered before. I presumed, as part of my normal tin-foil-hat paranoia, that Goldman Sachs was cheating big time on trading. I presumed that before this code was stolen and still presume that. Obviously Goldman Sachs could not care less whether one Pythonic Cow on an internet forum suspects them of fraud or not.

However the chance exists that this code theft could be the "thing that goes bump in the night" calling the attention of a wider audience to possible illegal activities of Goldman Sachs.

Now that could be very interesting if Goldman Sachs can't put this back in Pandora's box.

[ThePythonicCow]

Re: Ex-Worker Said to Steal Goldman Code (or nobody but GS is allowed to manipulate the market?)

Another aspect of this case that I had guessed before has received confirmation.

You may recall that the New York Stock Exchange (NYSE) weekly automatic trading volume report for last week dropped Goldman Sachs. Previously they had been the number one volume trader. Last week NYSE report didn't even mention them.

It was my earlier speculation that the absence last week of Goldman Sachs from this report was not materially related to the theft of this trading code. That speculation seems confirmed now.

At NYSE Issues Correction, Goldman PT Volume Double Of Second Broker, Zero Hedge reports that the NYSE has corrected last weeks report, placing Goldman Sachs back in its usual first place position.

So (apparently) this was just an unrelated NYSE clerical error.

[D-Mack]

Re: Ex-Worker Said to Steal Goldman Code (or nobody but GS is allowed to manipulate the market?)

Goldman Sachs Loses Grip on Its Doomsday Machine: Jonathan Weil

...
Market Manipulation

All this leaves us to wonder: Did Goldman really tell the government its high-speed, high-volume, algorithmic-trading program can be used to manipulate markets in unfair ways, as Facciponti said? And shouldn’t Goldman’s bosses be worried this revelation may cause lots of people to start hypothesizing aloud about whether Goldman itself might misuse this program?

Here’s some of what we do know. Aleynikov, a citizen of the U.S. and Russia, left his $400,000-a-year salary at Goldman for a chance to triple his pay at a start-up firm in Chicago co- founded by Misha Malyshev, a former Citadel Investment Group LLC trader. Malyshev, who oversaw high-frequency trading at Citadel, said his firm, Teza Technologies LLC, first learned about the alleged theft July 5 and suspended Aleynikov without pay.


...

Facciponti said the bank told the government that “they do not believe that any steps they can take would mitigate the danger of this program being released.” He added: “Once it is out there, anybody will be able to use this, and their market share will be adversely affected.” All Aleynikov would need to get the code from the German server is maybe 10 minutes with a cell phone and an Internet connection, Facciponti said.


...

Meantime, it would be nice to see someone at Goldman go on the record to explain what’s stopping the world’s most powerful investment bank from using its trading program in unfair ways, too. Oh yes, and could the bank be a bit more careful about safeguarding its trading programs from now on? Hopefully the government is asking the same questions already.

http://www.bloomberg.com/apps/news?p...d=aFeyqdzYcizc

[g.e.bennett]

Re: Ex-Worker Said to Steal Goldman Code (or nobody but GS is allowed to manipulate the market?)

However the chance exists that this code theft could be the "thing that goes bump in the night" calling the attention of a wider audience to possible illegal activities of Goldman Sachs.

I wonder if the real concern is not disclosure of the software itself but release of the filter conditions they use to detect other people's programmed trades. If their targets know how their trades are being identified, the targets can tweak things so Goldman can't sneak in and buy first. That could throw a wrench in the market-lifting machine.

[CanuckinTX]

Re: Ex-Worker Said to Steal Goldman Code (or nobody but GS is allowed to manipulate the market?)

I'm sure this is putting on WAAAAY too much tinfoil, but has anyone else thought that all of these 'coincidental' celebrity deaths as of late is just a little too conveniently keeping everyone busy watching tribute shows to care what happens to our economy???

I never would have thought this way before but I'm getting to the point I won't put anything past certain individuals anymore who will seemingly do anything to keep their status quo.

I'll get even MORE suspicious if celebrity deaths continue until football comes back and the new fall tv shows are out.

[cjppjc]

Re: Ex-Worker Said to Steal Goldman Code (or nobody but GS is allowed to manipulate the market?)

I'm sure this is putting on WAAAAY too much tinfoil, but has anyone else thought that all of these 'coincidental' celebrity deaths as of late is just a little too conveniently keeping everyone busy watching tribute shows to care what happens to our economy???

I never would have thought this way before but I'm getting to the point I won't put anything past certain individuals anymore who will seemingly do anything to keep their status quo.

I'll get even MORE suspicious if celebrity deaths continue until football comes back and the new fall tv shows are out.

Stop it.

[LargoWinch]

Re: Ex-Worker Said to Steal Goldman Code (or nobody but GS is allowed to manipulate the market?)

This story made Bloombery today (in 4min.):

[D-Mack]

Re: Ex-Worker Said to Steal Goldman Code (or nobody but GS is allowed to manipulate the market?)

I'm sure this is putting on WAAAAY too much tinfoil, but has anyone else thought that all of these 'coincidental' celebrity deaths as of late is just a little too conveniently keeping everyone busy watching tribute shows to care what happens to our economy???

I never would have thought this way before but I'm getting to the point I won't put anything past certain individuals anymore who will seemingly do anything to keep their status quo.

I'll get even MORE suspicious if celebrity deaths continue until football comes back and the new fall tv shows are out.

There is a lot of manipulation going on, I somehow had the feeling with this
abortion doctor. But the media will focus on anything except the important stuff, regerdless if it's provoked or just a coincidence.

May 15, 2009
More Americans “Pro-Life” Than “Pro-Choice” for First Time
Also, fewer think abortion should be legal “under any circumstances”
by Lydia Saad

PRINCETON, NJ -- A new Gallup Poll, conducted May 7-10, finds 51% of Americans calling themselves "pro-life" on the issue of abortion and 42% "pro-choice." This is the first time a majority of U.S. adults have identified themselves as pro-life since Gallup began asking this question in 1995.

George Tiller Killed: Abortion Doctor Shot At Church

AP/Huffington Post
First Posted: 05-31-09 12:40 PM | Updated: 05-31-09 11:08 PM

http://www.huffingtonpost.com/2009/0..._n_209504.html

[ThePythonicCow]

Re: Ex-Worker Said to Steal Goldman Code (or nobody but GS is allowed to manipulate the market?)

The location of the European server to which Aleynikov uploaded his allegedly stolen Goldman software has apparently been uncovered.

Roopinder Singh runs the open Subversion server xp-dev.com in the UK. Singh had his server taken down by the authorities for a couple of days, shortly after Aleynikov's arrest, so that some stolen software could be removed. His xp-dev server is back on the air now and he describes what he can (what he is allowed to say) in his servers blog, at The Story So Far - Why XP-Dev.com Was Down For 45 Hours.

Singh cannot state that it was Aleynikov's upload that was the caused the authorities to get all in a huff, but I'd wager a beer it was.

Here is what Singh wrote:

== begin quote from Singh's blog ==

“Outage” - a word that comes with so much burden and disgust, especially nowadays with the advent of cloud computing, most users expect a full 24x7 uptime, regardless of the service. However, the reality of it is that even services like Google App Engine can go down. Most of these outages are down to very common events (and boy, we’ve heard our share of them!) like disk failures, security breaches, network outages and even data center fires. Hey - even lightning can strike the cloud, right ?
When XP-Dev.com disappeared off the internet on 6th July 2009 at 15:20 BST, I immediately thought that it was one of the usual reasons. However, when I realised that all XP-Dev.com servers (we have a few of them) disappeared, I began to panic. For a moment, I thought that something really bad had happened – I mean, to the extent that it was the end of the internet as we knew it.
After trying to diagnose the situation for 30 minutes or so, I called up the service providers and they basically told me that they couldn’t tell me what had gone wrong. All they could say was that their infrastructure was working fine, but they had to disconnect my servers. Apparently, the only person that had the authority to tell me what was going on had gone back home for the day, and I had to wait till the morning. I found that really odd, and began to panic even further! Was it a security breach ? Was one of my processes doing something really sick and affecting others in the data centers ? Or maybe Goblins just came out and started eating away at the data center. I even re-read their Terms of Service and Policy Notes to double check that I had not done anything “out of the ordinary”.
At around 9pm BST, I get a call from the “local authorities” (I can’t say who they are right now, but rest assured that they are valid local UK authorities that have jurisdiction in UK) saying that they wanted to visit me at home to discuss XP-Dev.com. I just blew my mind at this point – what in the world happened on XP-Dev.com to make these guys visit me at home ?
It turns out that some idiotic moron a user had uploaded data on to the service that he/she was not authorised to have. This is your basic intellectual property theft case that we’re talking about here. The local authorities had to take all the server hard drives for examination, and I was told that someone will be in contact with me the following day (i.e. 7th July 2009).
The following day, I was on the phone trying to get them to speed things up, but to no avail. Apparently everyone was trying their very best. Later in the day, I did get a call that mentioned that the hard disks will only be returned to the data center the following day (i.e. today).
This morning at around 9am BST, the local authorities visited me at home. We got everything sorted out and the service was brought online at around 12noon BST.
The main issue here is that this case of IP theft is an ongoing investigation, and I really couldn’t tell you guys anything at all. In fact this whole blog post is the only amount of information I can let out even at this point.
Hell, I hate myself for doing that to you. It totally goes against every single grain of ethical business practices that I’ve grown to adhere to and love.
A 45 hour outage is inexcusable. But this is one of those WTF moments that I just have to take in and suffer with my beloved users. It is really uncommon for any service on the internet to go through this sort of “experience”. Having said that, any service on the internet is exposed to this risk where certain users upload/share information that they do not own.
There will be some changes to XP-Dev.com in the coming weeks to avoid the lengthy delays that the authorities took to return the hard drives. In fact at one point yesterday, I was contemplating to disable creation of new repositories for Free users, but then, two minutes later, immediately retracted from the idea thinking “Why should thousands upon thousands of users get affected due to one user's silly actions?”.
The one thing that I will definitely do is bringing the servers closer to home (UK). It will require purchasing some hardware and the co-location costs, but I think it will be a worthwhile investment – for you and for me. In fact, from the quotations that I’m looking at, the new servers should be faster (which is always a good plus point).
I do apologise for the prolonged outage, but I hope you do understand that a lot of it was out of my control – I just couldn’t pull off a Chuck Norris and get those hard drives back, now, could I ?
Everything should be back to when it was taken offline on 6th July 2009. If there are any questions, please do put them in the comments below, or just raise a support ticket.

== end quote from Singh's blog ==

This continues to look to me like Aleynikov intended to take a private copy of the software he had been working on at Goldman to his new job.

I've used such Subversion servers myself. They are a convenient place on "someone else's" computer to keep a copy of something you don't want to lose. The Subversion software allows multiple people to make actively controlled and tracked changes to a common piece of software, however there is no indication here that Aleynikov was making use of the shared development capabilities of Subversion.

In my opinion, this wasn't a public open source shared development project. Rather it was just a programmers private stash. For someone familiar with Subversion, this use of Singh's server to stash a copy of some valued software would be almost as easy as posting a reply to an iTulip thread is to most of you reading this post. Unfortunately for Mr. Aleynikov, Goldman Sachs doesn't (properly so) take kindly to such stashes of its proprietary software, and also unfortunately for Mr. Aleynikov, Goldman Sachs seems to have extraordinary connections to some major law enforcement agencies.

There is no indication that I've seen that Aleynikov shared the access information for this Subversion project on xp-dev.com with anyone else. Thus only Singh and the datacenter admins for the xp-dev.com servers would have had access to this uploaded software, and they had no clue it was there and no interest in the software if they even did know it was there.

[BrianL]

Re: Ex-Worker Said to Steal Goldman Code (or nobody but GS is allowed to manipulate the market?)

Just wanted to say thank you for posting a programmer-mindset perspective on this. I think the scenario you describe is totally plausible. Definitely in line with what I've seen elsewhere in the industry. Programmers often solve similar problems from job to job and think keeping a backup of previous work is harmless.

None of this excuses it of course, but I think the motive is important to consider. This seems like it could be more a case of extreme naiveté rather than malicious theft.