Intellectual Property Law

FBI: Russian Programmer Stole Stock-Trading Secret Code

By Kim Zetter

A computer programmer working for Goldman Sachs was arrested last week on charges that he stole proprietary source code for software his employer uses to make sophisticated, high-speed, high-volume stock and commodities trades.

Sergey Aleynikov, who earned nearly $400,000 a year in his job, allegedly stole 32 megabytes of data over four days in June and transferred it to a website hosted in Germany before trying to erase his tracks from Goldman Sach’s network. He neglected to take into account, however, that the company kept a backup record of its command logs. On at least two occasions, he transferred the data remotely while logged into his company’s network from his home computer.

Aleynikov, a naturalized U.S. citizen from Russia, was arrested on July 3 at the Newark Airport in New Jersey as he exited a flight and is being held on charges related to theft of trade secrets until he posts $750,000 in bond, pays $75,000 in cash and surrenders his travel documents.

Although the complaint against him (.pdf) doesn’t name the financial institution he worked for, news outlets, and a source familiar with the case, say Aleynikov worked for Goldman Sachs.

Aleynikov allegedly stole the code in the last days before he left Goldman Sachs on June 5 to take a job with a new, unnamed firm in the high-volume trade industry that promised to pay him three times the salary he’d been earning.

Goldman Sachs apparently only uncovered the theft after it recently began monitoring https transfers and saw a large volume of data leaving its network, according to the complaint. A spokesman for Goldman Sachs declined to comment on this.

Aleynikov allegedly used a script that copied, compressed, encrypted, renamed files and then uploaded them to a website in Germany that is registered to an individual with a UK address. Once the data was transferred, the program used to encrypt the files was erased.

According to the complaint, Aleynikov had been employed since May 2007 to develop Goldman Sach’s trading software. The system allowed the company to swiftly process quickly changing market data and place automated trades based on the latest market conditions. It spent millions to acquire and develop the system, which resulted in millions of dollars in trading profits each year, according to the court record.

Aleynikov reportedly confessed to taking the code but told FBI agents he only intended to collect “open source” files on which he’d worked but had inadvertently collected other files as well.

Photo: Goldman Sachs tower. Saebaryo/Flickr

Full post as published by Threat Level on July 06, 2009 (boomark / email).