Goldman Sachs Algorithms Stolen By Sergey Aleynikov Now Leaked On The Internet

Posted Jul 8, 2009

Last week, the FBI arrested Sergey Aleynikov, a former VP at Goldman Sachs.  Aleynikov uploaded secret algorithms used by Goldman Sachs that run automated stock and commodities trading.  The data was uploaded to a server in Europe. Shortly after the deed was done, Aleynikov resigned from his $400,000 per year job at Goldman.

Unfortunately the code has leaked on to the Internet and could do some damage to the stock market.  “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,” stated U.S. Attorney Joseph Facciponti. ?The copy in Germany is still out there, and we at this time do not know who else has access to it.?

Aleynikov is being held on a $750,000 bail as of right now and he told FBI officials that he only intended to download open source files from the server but ended up downloading more than he had intended.

When Aleynikov posted his resignation, he was intending to join Teza Technologies LLC.  Aleynikov became an employee of Teza on July 2nd  and then was arrested on July 3rd.  Teza stated that they learned about the arrest on July 5th and suspend Aleyniko’s employment without pay pending an investigation.

Goldman uses algorithms and a high frequency trading platform software to buy stock within a few milliseconds of company news being released and then selling a few moments later when other financial companies receive the company news.

At the beginning of June, Aleynikov ran scripts using a bash shell to copy and compress a large amount of source code.  After the compression , he sent it to the servers through a secure server protocol to a server in Germany.  He sent about 32MB in ASCII code about four times.

Aleynikov tried to have his script erase the bash history, but Goldman keeps a backup of everyone’s bash history.  This is how he was caught.  Aleynikov is now waiting for his trial. Perhaps while Sergey is waiting on his trial, he may be thinking of new ballroom dancing moves.

[via Ars Technica/Bloomberg]