Adrienne Gonzalez's  Instablog

Via Jr Deputy Accountant

Goldman! Oh Goldman, Goldman, Goldman. What happened? Fissures in the pristine armor of Government Sachs? (ht reader BK for this, and I will have you know I wrote this first and then ran outside to the street in front of my office to do the Thriller zombie dance of joy)

Also, I would like to note that I never suggested anyone f--k with the quants. No way. You'll end up unleashing the 9th unknown dimension of hell, and the worst part? It's all automated!

Reuters:

Did someone try to steal Goldman Sachs’ secret sauce?

While most in the US were celebrating the 4th of July, a Russian immigrant living in New Jersey was being held on federal charges of stealing top-secret computer trading codes from a major New York-based financial institution—that sources say is none other than Goldman Sachs.

The allegations, if true, are big news because the codes the accused man, Sergey Aleynikov, tried to steal is the secret code to unlocking Goldman’s automated stocks and commodities trading businesses. Federal authorities allege the computer codes and related-trading files that Aleynikov uploaded to a German-based website help this major “financial institution” generate millions of dollars in profits each year.

The platform is one of the things that apparently gives Goldman a leg-up over the competition when it comes to rapid-fire trading of stocks and commodities. Federal authorities say the platform quickly processes rapid developments in the markets and uses top secret mathematical formulas to allow the firm to make highly-profitable automated trades.

The criminal case has the potential to shed a light on the inner workings of an important profit center for Goldman and other Wall Street firms. The federal charges also raise serious questions about the safeguards Wall Street firms deploy to protect their proprietary trading systems.

The criminal case began to unfold on the evening of July 3 when Aleynikov was arrested by FBI agents at Newark Liberty Airport, after returning from Chicago. Aleynikov had just started a job with another firm in Chicago, after leaving the big firm in NY in early June. It appears the financial institution allegedly victimized by Aleynikov had alerted federal authorities that its former employee might be up to no good.

On July 4, Aleynikov was processed on a “theft of trade secrets” charge in a criminal complaint that was filed in federal court in Manhattan. As of this afternoon, he was still being held in federal custody pending posting of bail.

A Goldman spokesman declined to comment on the incident. A spokeswoman for the US Attorney in the Southern District of New York didn’t comment. Authorities reportedly took all the computers from Aleynikov’s home in New Jersey.

Sabrina Shroff, Aleynikov’s lawyer, says the facts will bear out that her client is innocent. She’s hoping he will be released from custody soon.

Well wait a minute, what happened? Aleynikov's duties make him sound like some kind of Quant Adonis charged to develop a program based on "very low latency (microseconds) event-driven market data processing, strategy and order submission engine.”

And here you thought anonymous German servers were only good for porn and bootleg movies (disclaimer: Jr Deputy Accountant does not partake in either... pfft)!

This story is almost too wild and complicated for us to focus on so I suggest you follow it as it unfolds over at Zero Hedge as they obviously have more time to track these things than I.

We have said it before and will happily say it again; it looks like Goldman has no choice but to shrink away and let Jamie Dimon take over as Chief Deputy Assraper of the American financial system. Sorry boys, but looks like this is your stop...