Insider Threat: Ex-Goldman Sachs Programmer Charged with Code Theft

In another high-profile insider theft case involving a financial services company, the U.S. Justice Department and FBI agents arrested a former Goldman Sachs computer programmer on July 3, charging that he stole computer codes linked to the Wall Street trading firm's high-speed transaction platform.

According to the complaint filed in court, Sergey Aleynikov, 39, a naturalized U.S. citizen who emigrated from Russia, allegedly unlawfully copied, duplicated, downloaded and transferred computer codes from a New York-based financial institution, then uploaded the codes to a computer server in Germany. News of his arrest was first reported by Reuters on Sunday.

The complaint from the government didn't specifically reference Goldman Sachs. Goldman Sachs' name was mentioned during Saturday's bail hearing.

The arrest of Aleynikov has no impact on Goldman Sach's clients or the firm's business, but is related to codes involved with Goldman Sachs' proprietary trading, which is its business of trading securities with its own money. The investment company has historically relied on proprietary trading for the majority of its revenue. The codes that Aleynikov allegedly took were related to this type of computerized trading.

The former computer programmer's actions took place sometime between June 1 and July 3. Aleynikov was arrested at Newark airport after getting off a flight. He had worked at Goldman Sachs as a computer programmer from May 2007 until June 5.

When Aleynikov was interviewed by FBI officials, he only said he had taken the codes unwittingly and that whatever he is accused of doing wasn't done on purpose. Federal defender Sabrina Shroff, who is his lawyer, states she believes her client is innocent.

The federal complaint states Aleynikov was given access to the computer code as part of a team responsible for developing and improving the trading platform. The company said he was required to sign its confidentiality agreement when he first took a job there. The filing also says at some point before June, Aleynikov told Goldman Sachs he would resign. His salary before he resigned was about $400,000 a year. The FBI agent said a Goldman representative who spoke to Aleynikov about his resignation said he was leaving to work for a new company that also planned to engage in high-volume automated trading.

FBI Special Agent Michael G. McSwain says in the filing the computer codes that Aleynikov took were related to a platform that allows Goldman Sachs to engage in high-speed and high-volume trades on stock and commodities markets. The bank considers the code proprietary. Confidential information and trades made on the platform generate millions of dollars in profits each year for the company.

According to the complaint, Aleynikov says after his arrest that he "only intended to collect 'open source' files on which he had worked, but later realized that he had obtained more files than he intended." He also "claimed that he did not distribute any of the proprietary software that he obtained from the Financial Institution" and had agreed with the new employer not to use unlicensed software.

Aleynikov was granted bail, but has yet to meet the bail conditions of a $750,000 personal recognizance bond. He will also not be able to travel outside of the New York metro area and turn in his passport and other travel documents.

About the Author

Linda McGlasson

Linda McGlasson

Managing Editor

Linda McGlasson is a seasoned writer and editor with 20 years of experience in writing for corporations, business publications and newspapers. She has worked in the Financial Services industry for more than 12 years. Most recently Linda headed information security awareness and training and the Computer Incident Response Team for Securities Industry Automation Corporation (SIAC), a subsidiary of the NYSE Group (NYX). As part of her role she developed infosec policy, developed new awareness testing and led the company's incident response team. In the last two years she's been involved with the Financial Services Information Sharing Analysis Center (FS-ISAC), editing its quarterly member newsletter and identifying speakers for member meetings.

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