23 November 2014

FBI nabs programmer accused of stealing trading code

06 July 2009  |  10257 views  |  3 digital fingerprints

A Russian computer programmer has been arrested by the FBI, accused of stealing proprietary trading code from the New York-based financial institution he used to work for.

According to an FBI affidavit, Segey Aleynikov copied proprietary code relating to the financial institution's platform for high speed, high volume stock and commodities trading, before uploading it to a server in Germany.

Aleynikov worked at the unnamed firm - which according to Reuters columnist Matthew Goldstein is Goldman Sachs - from May 2007 until June 2009 as a computer programmer in a team responsible for, among other things, developing and improving the platform.

The FBI says Aleynikov quit his $400,000 a year job last month, moving to a new company in Chicago that "intended to engage in high-volume automated trading" and that paid him around three times his old salary.

In June, whilst monitoring the uploads of data from its computer system via https, the financial institution noticed that Aleynikov's work desktop was used at least four times to transfer a total of 32 megabytes of information to an external Web site.

The bank then managed to recover a record of commands entered in the accused's desktop, known as a "bash history", relating to the Unix-based operating system used to edit and maintain code associated with the platform.

Aleynikov was arrested on 3 July as he got off a flight at Newark Airport and has since been processed on a "theft of trade secrets charge" in a criminal complaint.

The affidavit says he gave a statement confirming he copied the encrypted files from the firm's server and uploaded them to the Web site before deleting the encryption software and bash history and moving the files to his own computers.

However, Aleynikov claims he only intended to take open source files, not realising until later that he had also copied proprietary code, which he insists he has not given to anyone else.

The financial institution involved has spent million of dollars on the platform and accompanying programs, which it believes gives it a "competitive advantage among other firms that also engage in high-volume automated trading".

The FBI affidavit says the bank believes that if its competitors got hold of the platform, its ability to profit from the speed and efficiency it offers "would be significantly diminished".

Update

According to Reuters, Aleynikov has had bail set at $750,000 by US Magistrate Kevin Nathaniel Fox in Manhattan.

Comments: (3)

Matt White - Finextra - Toronto | 06 July, 2009, 16:52

Here's a YouTube video of the criminal mastermind...ballroom dancing:

http://www.youtube.com/user/saleyn

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Paul Penrose - Finextra - London | 07 July, 2009, 15:44

Sergie also has a rather detailed profile on LinkedIn: www.linkedin.com/in/aleynikov.

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Aldon Hynes - Toomre Capital Markets - Woodbridge CT | 08 July, 2009, 13:16

It seems as if this story has many interesting issues to explore around data security and transportation of data across the Internet to computers in different countries.  However, much of the coverage in the main stream media seems to focus on issues of the programmer being Russian, the allure of 'trade secrets' and 'proprietary trading'.  For a much different take on the story, I would encourage people to read my personal blog post (which is VERY long) at

http://www.orient-lodge.com/node/3642

I would love to hear other people's thoughts on this case.

Aldon

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