September 3, 2010 / 10:24 PM / 8 years ago

Ex-Goldman programmer wins partial dismissal

NEW YORK (Reuters) - A federal judge on Friday dismissed part of a criminal case accusing a former Goldman Sachs Group Inc computer programer of stealing proprietary computer code from the bank’s lucrative high-frequency trading platform.

The defendant, Sergey Aleynikov, won the dismissal of one count, alleging unauthorized computer access, in a three-count indictment, in a ruling by U.S. District Judge Denise Cote in Manhattan.

Cote rejected Aleynikov’s request to dismiss the other two counts, which concerned the alleged theft of trade secrets and transportation of stolen property in interstate commerce.

The government had alleged that on June 5, 2009, his last day working at Goldman, Aleynikov downloaded the code to an outside server and transferred it over the Internet.

Aleynikov sent code files to his personal email, a laptop and other places for storage, and on July 2 took the laptop and another storage device to his new employer, Teza Technologies LLC, a high-frequency trading start-up based in Chicago, prosecutors charged.

The FBI arrested Aleynikov a day later at Newark Liberty International Airport. Teza later suspended him. The arrest has been credited with drawing attention to the fast-growing business of high-frequency trading in U.S. stocks.

Cote said in dismissing the one count that Aleynikov could not have violated one provision of the Computer Fraud and Abuse Act, as prosecutors said, because the government conceded he had been authorized to access the relevant source code.

Aleynikov was 40 at the time of his February indictment, and could have faced up to 25 years in prison if convicted on all charges.

“Based on our preliminary review, we are very gratified that the judge found no basis for charging Mr. Aleynikov with violating the computer fraud and abuse act,” said Kevin Marino, the defendant’s lawyer, in an interview.

Marino said he may appeal the decision to let the remaining counts stand to the U.S. Second Circuit Court of Appeals.

A spokeswoman for the U.S. attorney’s office in Manhattan declined to comment. Goldman did not immediately return a call seeking comment.

Two months after Aleynikov’s indictment, prosecutors charged former Societe Generale trader Samarth Agrawal with stealing computer code used in high-frequency proprietary trading in the French bank’s New York office.

Agrawal was indicted in May, and has pleaded not guilty, his lawyer Ivan Fisher said. A trial in that case is set for November 8, court records show.

The case is U.S. v. Aleynikov, U.S. District Court, Southern District of New York, No. 10-cr-00096.

Reporting by Jonathan Stempel; additional reporting by Basil Katz; editing by Tim Dobbyn and Andre Grenon

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