Michael Lewis on Goldman Sachs
33 comments / August 9, 2013
Four years ago, I wrote a small post about a Russian programmer called Sergey Aleynikov. He allegedly has stolen some of Goldman’s HFT source code.
He switched from Goldman to a Chicago based hedge fund. Arrested and prosecuted for taking some source code with him, he was sentenced to eight years in federal prison. Unbelievable.
Michael Lewis, author of Liar’s Poker, has done some research and investigated the matter for Vanity Fair. Conclusion is Goldman Sachs has gone too far. The FBI nor the Jury had any clue what Aleynikov had done, exactly. Worse, now Goldman is chasing him again. Doesn’t make them look pretty.
It’s definitely a good read for the weekend :
Michael Lewis: Did Goldman Sachs Overstep in Criminally Charging Its Ex-Programmer?
great story, GS has way too much power. the only reason for putting this poor guy in jail is to avoid a new competitor in the market. If you are not with then then you are against them :/
Lucky for Bhandari Optiver is no Goldman…
if optiver was goldman, what do you reckon would have happened to him?
what a bunch of bs, Sergey from GS or Samarth from SocGen landed in Jail because they stole from their employer. Rather than straight forward cash embezzlement which you morons can easily understand, stealing code is even worse than stealing cash, it’s not one time and it can impair business for long time. IP > Money, idiots.
Little caveat here ofcourse, both Segey and Samarth didn’t actually end up using the stolen code at the new employer since its usually not possible to pick one piece of code from one firm and deploy it at another, its far more nuanced than that. And in any case, you can re-create the code faster than trying to integrate two sets of code. With that in mind, the jury should of course had seen it as unforced transgression rather than an actual embezzlement
You’re forgetting Bhandari isn’t even a developer. He probably didn’t have access to the source code anyway.
how did you reach the conclusion that someone confused bhandari to be a developer!
“how did you reach the conclusion that someone confused bhandari to be a developer!”
Because someone said that he is lucky that Optiver is not Goldman. The developers are the prime suspects in this thing not Bhandari. In any event, these are civil proceedings not criminal proceedings so it is not possible for anyone to go to jail.
do you have a tendency to jump to random conclusions when you hear other people speak?
bhandari can be conspirator with other co-founders who had access to the code?
“bhandari can be conspirator with other co-founders who had access to the code?”
Of course he could be a co-conspirator. But why single him out and not the developers?
because it’s implied, you muppet?
“The developers are the prime suspects in this thing not Bhandari.”
In the list with respondents in the court document the first person to be named is Bhandari, so obviously he’s also a prime suspect.
“In any event, these are civil proceedings not criminal proceedings so it is not possible for anyone to go to jail.”
If Optiver would have had the same clout and connections as Goldman, it might have been something else than civil proceedings. Tibra is accused of taking a whole trading system, this guy was only accused of taking a small part of the code and Goldman already went ballistic.
As an ex-developer it’s so common to take your code with you when you leave a company. It’s not because you want to “steal the code” but because it contains examples of nifty stuff you’ve done which you’d like to perhaps re-use again – since this is how you can continually build on good things you’ve done in your career.
Naive yes, malicious no. Sure the courts should have proven not only that Alex took the code but that it was used at the new company – this would be the real crime.
yes, it sounds naive and maybe even positive to take the code and re-use, but there is little clause in your employment contract saying its the property of the company, if you like to take it, ask for permission or recreate from memory, or better still keep a log at home of all the cool things you did at office that day, it sux, but welcome to the world of corporate big brother
yeh goldman has clout, but you are forgetting the circumstances… compare the strength of evidence against Sergey vs quality of evidence against tibra & co; compare FBI vs aussie justice system; compare dutch trading house vs native aussies; above all just again compare the quality of evidence and the judicial system you are operating in; it wouldn’t be hard to imagine a similar outcome if you replaced goldman with another similar firm, look at socgen case, not much difference to what happened there
anybody made money off the 6% spike?
Which 6% spike ?
Any action happening anywhere ?
Guess you didnt make anything then ;). China close on thursday was one big spike, only to retrace immediately after.
good morning
the SHCOMP anomaly is another high speed disaster
http://www.bloomberg.com/news/2013-08-18/everbright-reports-loss-after-flawed-trades.html
strategic investment department, lol, muppets; 30 bucks, in grand scheme of things, nothing much to write about; what were the exchange controls; any circuit breakers on index or stock trading?
Fucking GS was able to cancel all the trades in the NYSE options exchange…they made lobby like not tomorrow, while one year ago they made 600 M from Knight error…no traded got cancelled there.
http://www.bloomberg.com/news/2013-08-20/goldman-says-exchanges-working-to-resolve-options-order-mishap.html
how did GS make 600m when knight dropped 400m? Did they go more aggressive in both directions, very short before knight sold off portfolio and then very long before mean reversion?
what’s wrong with GS being able to request for trade cancel if it’s within rules?
‘The exchange said decisions would be made using its rules for obvious and catastrophic errors, which are based on how far the price of a contract deviates from previous trades. If they don’t qualify as an obvious error, U.S. exchange may be reluctant to cancel them, according to Neal Wolkoff, former chief executive office of the American Stock Exchange’
The problem is that there is too much discretion. If it were a foreign prop shop that made this mistake, trades wouldn’t be cancelled. Now it’s Goldman, things are different.
Also, it shouldn’t take days to decide whether to cancel or not. When you have clear rules, like Eurex or Liffe, you know within 30 minutes whether a trade is going to be cancelled. What if you traded against them? At what point can you start hedging your trade? What if you already did, and you only find out two days later that the trade is busted?
did you even read the bloody article? discretion my ass
“NYSE Amex Options is reviewing a large number of erroneous executions that took place this morning,” the exchange said in a note to traders. “As permitted by the rules, we anticipate that most of the impacted trades will be busted.”
‘Under Scrutiny’
The exchange said decisions would be made using its rules for obvious and catastrophic errors, which are based on how far the price of a contract deviates from previous trades. If they don’t qualify as an obvious error, U.S. exchange may be reluctant to cancel them, according to Neal Wolkoff, former chief executive office of the American Stock Exchange.
“Since everyone is under scrutiny and you want to be even-handed, the exchanges tend to be pretty wary about going outside the standard benchmarks for what’s considered erroneous trades,” he said in a telephone interview today.
which foreign shop’s error trades not get cancelled, stop with all your bs abt gs
‘should’ is very strong word buddy, there are lot of things that should or should not happen, if it takes little bit more time, fine; if you don’t like it in america, don’t trade, go back to old skool eurex and liffe
If you have traded against error trade, check rules and only then hedge, how long have you been trading that you need to be told this basic fact about error trading
And if you hedged, then pls unwind it, the profits or losses are yours, it’s your fault to not know the rules about error trading,
now stop your bitching
also, it’s america, if you don’t like it, there is something called class action lawsuit, use it if you will
[modbreak]
Dude, relax. Nobody is attacking you. Stop arguing with everybody abt everything.
here, likely minus 100 bucks for gs, happy?
http://www.cnbc.com/id/100976404
Ah, a modbreak. That was abt time. Getting tired of this “abt” guy.
It’s seem that code transferts are in vogue those last weeks…http://online.wsj.com/article/SB10001424127887323980604579031034025132054.html
Sorry, transfer without a “t” in english!
anybody got a transcript for the article?