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According to the Collins English Dictionary 10th Edition fraud can be defined as: "deceit, trickery, sharp practice, or breach of confidence, perpetrated for profit or to gain some unfair or dishonest advantage".[1] In the broadest sense, a fraud is an intentional deception made for personal gain or to damage another individual; the related adjective is fraudulent. The specific legal definition varies by legal jurisdiction. Fraud is a crime, and also a civil law violation. Defrauding people or entities of money or valuables is a common purpose of fraud, but there have also been fraudulent "discoveries", e.g. in science, to gain prestige rather than immediate monetary gain
*As defined in Wikipedia

Tuesday, November 30, 2010

Goldman Sachs and Sergey Aleynikov

Goldman Sachs is very protective of its HFT secrets. Aleynikov is facing a trial for allegedly stealing secret algorithms from Goldman Sachs's computers. Neither the government nor GS likes leaks of its innermost workings.

Below is an excerpt from an article by Grant McCool.

NY Trial Opens in Goldman Secret Trading Code Case
By Grant McCool - Reuters

NEW YORK (Reuters) - More than 18 months after U.S. prosecutors charged computer programer Sergey Aleynikov with stealing speed-trading code from Goldman Sachs, Wall Street's most influential bank, a jury was selected on Monday to hear the complex trial evidence.

The panel of 12 and five alternates will first listen to opening statements from the government and Aleynikov's defense lawyer on Tuesday morning at a trial expected to last three weeks in U.S. District Court in New York.

Aleynikov was charged in July last year with trade secrets theft for purportedly taking Goldman code to his new employer -- Teza Technologies LLC, a high-frequency trading start-up in Chicago.

Aleynikov, an immigrant from Russia who became a U.S. citizen, has been free on bail since his arrest. If convicted by the jury, Aleynikov, 40, faces a statutory maximum prison sentence of up to 10 years on two criminal counts.

His lawyer, Kevin Marino, said the trial was an opportunity for the public to hear Aleynikov's side of the story.

"Sergey Aleynikov did not steal trade secrets from any Goldman Sachs product. He did not intend to do harm to Goldman Sachs and he could not do harm to Goldman Sachs," Marino said before the trial. "He has been living under a cloud of accusation."

High-frequency trading, or high-speed automated trading, has become an increasingly important and competitive business, generating millions in profits for banks and brokerages. The computer codes that help firms trade shares in milliseconds are closely guarded secrets.

U.S. prosecutors had asked Judge Denise Cote to close parts of the trial to protect Goldman's trade secrets, but she indicated at a November 19 pre-trial hearing that it was premature to rule because she would need more specificity and context.

"We'll just march through these issues, one by one, as they arise," Cote said.

During Monday's jury selection, the judge asked jurors whether they used computers at work and at home, whether they knew anyone at Goldman Sachs or in law enforcement. The jurors selected include a teacher, a real estate broker and a man who works for a major bank.

Read the entire article here


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