The recent allegations of trade secret theft and trafficking against former Goldman Sachs programmer Sergey Aleynikov raise important questions of corporate security and policy to handle a new generation of attempted economic disruption. According to a deposition given by FBI Agent Michael McSwain, Aleynikov, a former programmer at Goldman Sachs, is purported to have uploaded proprietary trading code from Goldman Sachs’ offices in New York to a server located in Germany. [1] Regardless of the outcome of the Goldman case, such a potential leak has wider implications for the future of corporate and national security. It is doubtful this was a mere prank. Recent history has shown that economic crime is seldom the product of the actions of a lone individual. [1]
I thought it was kind of cute when the radical feminist poet Kate Jennings discovered a Wall Street awash in spooks, but these two guys are getting on my nerves. Now we’re supposed to believe in EDoS, a new econo-terrorist exploit that involves revealing trade secrets.
like … You rang?
Over the last half year or so I’ve noticed massive losses to public service pension plans in CA (rating agency problems), QC (exposure to ABCP) and NM (I think that one was just dumb investments). If those anecdotes mean anything taken together, it’s the great sucking sound of the savings of America’s middle class disappearing down a hole.
Where did the money go? I would assert it went directly into recapitalizing the great banks that were insolvent as of 9/18 ’08, the day we entered a command economy regime administered by a bunch of bank lobbyists, of all things.
Recall that the great bear rally we’re presently enjoying was touched off by a disingenuous leak in Europe of positive, but incomplete information about Citigroup’s profitability. I think that what’s keeping the S&P 500 floating in the air in much the same way that a brick doesn’t is systematic manipulation of the capital markets through HFT. And this has allowed the banks to sell common stock at grossly inflated prices.
EDoS my left ear. Plain old Mark 1 Mod 0 price discovery is about to demonstrate that what we’ve actually got here is fraudulent conveyance of wealth from the Baby Boom to the Bonus Banksters that’s as dumb as a bag of hammers, and as deep as the ocean.
But the joke is that the Teza founders all thought they were preparing to compete in a legitimate business sector. When Aleynikov was arrested on July 3rd, he waived his Miranda rights and cooperated with the FBI. This is not somebody who thought he was doing anything wrong.
Now astute Doomers may have noticed that I hid the word "disclosure" as an Easter Egg in my satire of an earlier (and less robust) attack on the presumption of Serge’s innocence. If, as I strongly suspect, the whole HFT enterprise is simply a key pillar holding up a close-coordinated systemic pyramid scam then the only point of this comedy would have been to nip Teza in the bud. There was a curiously blasé attitude on the subject of whether any material damage was done by the alleged crime, but on the other hand complex frauds just can’t tolerate fresh participants at a late stage.
But at a more fundamental level, this story is about Open Source Software. Are we now to regard uploading from a corporate entity to a subversion host as an act of economic terrorism? Among other things, the OSS community itself serves as an emergent fount of truth (RMS wasn’t a left-wing radical for nothing 
). There is getting to be much less tolerance for the stuff. Is OSS over?
Like Aurora’s virginity (don’t you just love the Freudian subtext in those classic Disney movies?) the present bubble in the capital markets is exquisitely sensitive to the pointy bits sticking out of certain productive tools. It would be just as dangerous to submit the bubble to the tender mercies of the discovery process in a criminal trial, but since the US still has a more-or-less working court system, the chances of that ever happening don’t look good.
But it doesn’t really matter. There’s already enough scrutiny directed at HFT that it won’t be able to hold price discovery at bay much longer.
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[1]: "Goldman Sachs’ Code and the Elephant in the Room", by Ethan S. Burger and Kenneth Gray, RGE Monitor, July 29, 2009.
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John,
The sum of all fears for me is not annihilation of the human race, but rather the annihilation of that which is human; a rejection of the natural inclination of enrichment to support the life of honor and courage in the face of wrong and corrupt.
OSS was the one good thing left that could prove that people were generally good and interested in helping others with little or undersized gains for themselves. Being good because being good felt good and that was more important than hookers and blow.
On the far left of that spectrum is a cabal of big banking conglomerates; a den of thieves who would prefer to stab someone in the back if they stepped in front of them on the subway. Ones who would enjoy kicking their mothers down the stairs in the name of eternal profits and unconscionable bonuses. Bunny and teddy bear killers.
No, to me, humanity was the ability to see the world through another being’s point of view. Instead, we have Oil speculators profiting at the expense of midwestern farmers; the pinnacle of unproductive bubble-chasing defeating the most basic of human needs: food, air, and water. We have banks reaping ungodly profits from the friction of outrageous interest rate spreads. For the past 2 years, I have watched as Goliath tore David’s limbs off and danced on his crushed corpse.
It isn’t so much that GS is evil, as it is pure evil. If there is a god in the heavens, can he possibly allow this terrible injustice to continue? Or, will Aleynikov be exonerated to level the playing field? Or, will Aleynikov become just one more giant terrorizing the countryside. This place just gets more and more bizzarre.
I used to laugh at the point in “So I Married an Axe Murderer” where the discussion of the pentavirate came up, but I fear he just got some of the players wrong.
Ben Bernanke must be chairman
Chuck,
That’s the nicest thing I’ve read all month
Actually, I think what really happened is that after the influence of Zheng He petered out in the mid-15th Century the resulting power vacuum resulted in a 600 year long era of consecutive waves of blue-water piracy based mostly out of NW Asia (the peninsula that thinks it’s a Continent), and which is only now winding down.
When you think about it, the “consumerism” that the 19th Century New Thought Movement has evolved into is an ideal belief system for a hoard of locusts. Not real sustainable, though.