November 29, 2010 / 11:37 PM / 9 years ago

NY trial opens in Goldman secret trading code case

NEW YORK (Reuters) - More than 18 months after U.S. prosecutors charged computer programer Sergey Aleynikov with stealing speed-trading code from Goldman Sachs, Wall Street’s most influential bank, a jury was selected on Monday to hear the complex trial evidence.

The panel of 12 and five alternates will first listen to opening statements from the government and Aleynikov’s defense lawyer on Tuesday morning at a trial expected to last three weeks in U.S. District Court in New York.

Aleynikov was charged in July last year with trade secrets theft for purportedly taking Goldman code to his new employer — Teza Technologies LLC, a high-frequency trading start-up in Chicago.

Aleynikov, an immigrant from Russia who became a U.S. citizen, has been free on bail since his arrest. If convicted by the jury, Aleynikov, 40, faces a statutory maximum prison sentence of up to 10 years on two criminal counts.

His lawyer, Kevin Marino, said the trial was an opportunity for the public to hear Aleynikov’s side of the story.

“Sergey Aleynikov did not steal trade secrets from any Goldman Sachs product. He did not intend to do harm to Goldman Sachs and he could not do harm to Goldman Sachs,” Marino said before the trial. “He has been living under a cloud of accusation.”

High-frequency trading, or high-speed automated trading, has become an increasingly important and competitive business, generating millions in profits for banks and brokerages. The computer codes that help firms trade shares in milliseconds are closely guarded secrets.

U.S. prosecutors had asked Judge Denise Cote to close parts of the trial to protect Goldman’s trade secrets, but she indicated at a November 19 pre-trial hearing that it was premature to rule because she would need more specificity and context.

“We’ll just march through these issues, one by one, as they arise,” Cote said.

During Monday’s jury selection, the judge asked jurors whether they used computers at work and at home, whether they knew anyone at Goldman Sachs or in law enforcement. The jurors selected include a teacher, a real estate broker and a man who works for a major bank.

A Goldman Sachs spokesman, Ed Canaday, declined to comment on the trial.

Aleynikov worked at Goldman from May 2007 to June 2009. Before leaving, prosecutors say he copied part of the proprietary code Goldman uses for speed-trading and deposited it in a server. They accused him of also downloading the code onto a flash drive and onto his computers at his New Jersey home.

Securities regulators are examining speed-trading practices following the “flash crash” that rocked stock markets on May 6.

In a trial earlier this month with similar allegations, a former Societe General high-frequency trader, Samarth Agrawal, was convicted of trade secrets theft by a jury.

Agrawal copied and printed out the French bank’s proprietary code before planning to move to a new job at a hedge fund in April this year.

The case is USA v Aleynikov, U.S. District Court for the Southern District of New York, No. 10-96.

Reporting by Grant McCool, editing by Matthew Lewis

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