Frederick Douglass

"Power concedes nothing without a demand. It never did, and it never will. Find out just what people will submit to, and you have found out the exact amount of injustice and wrong which will be imposed upon them..." Frederick Douglass

Saturday, February 18, 2012

Conviction of Ex-Goldman Programmer Overturned

Great piece.

It was stunning that Goldman was able to get its former employee Sergey Aleynikov arrested, and then convicted, for allegedly stealing computer code (“allegedly” is the right word, since the lower court verdict is now officially an acquittal). The fact that the securities firm could sic the FBI on the case in such short order seemed proof of the strongest form of “Government Sachs” conspiracy theories.

The idea that an intellectual property violation against a private was taken up by a prosecutor, the Manhattan US Attorney, looked like a perverse extension of the “corporations are people” view of the world. Goldman is a very profitable firm with numerous lines of business. The idea that loss of IP in one business could constitute serious harm to the firm seems quite a stretch, particularly in the area in which Aleynikov worked, high frequency trading. I’d imagine that any strategies in that arena have a very short shelf life, and thus whatever damage might have been done would have been of limited duration.

But the critical bit is the criminal versus civil distinction. While it was most decidedly not cool that Aleynikov made off with Goldman code, one has to question why taxpayer-funded prosecutors and prisons are being used to enforce less than crystal clear rights (“trade secrets” are far less clearly defined than copyright or patents).

The key phrase here is "high-frequency trading." Is it a coincidence that this man with contact with GS' biggest clients is being targeted by the bank and the government in the form of the FBI (which are, as we have seen these last few years, pretty much indistinguishable)?

Aleynikov is being railroaded (which is not to suggest that he's innocent). It is more likely that this is to protect GS and its high-end clients than outrage at the alleged offense. I have the feeling we will be hearing more about this in the future.