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I read Michael Lewis's article in Vanity Fair about this case back in 2013, and I remember being struck by this excerpt in particular: [Goldman] called the F.B

I read Michael Lewis's article in Vanity Fair about this case back in 2013, and I remember being struck by this excerpt in particular: [Goldman] called the F.B.I. in haste, just two days before, and then put their agent through what amounted to a crash course on high-frequency trading and computer programming. McSwain later conceded that he didn’t seek out independent expert advice to study the code Serge Aleynikov had taken. (“I relied on statements from Goldman employees.”) He himself had no idea of the value of the stolen code (“Representatives of Goldman told me it was worth a lot of money”) or if any of it was actually all that special (he based his belief that the code contained trade secrets on “representations made by members of Goldman Sachs”)...The F.B.I.’s investigation before the arrest consisted of trusting Goldman’s explanation of some extremely complicated stuff, and 48 hours after Goldman called the F.B.I., Serge was arrested. That, as the complaint highlights, the FBI instinctively acted as Goldman's punitive arm rather than conducting an independent investigation into the facts of the case is disturbing, regardless of the merit of the allegations. http://www.vanityfair.com/news/2013/09/michael-lewis-goldman-sachs-programmer http://www.vanityfair.com/news/2013/09/michael-lewis-goldman...

deleted 12y ago
[deleted]
- SixSigma 12y ago
  That's not irony, it's coincidence. Possibly even Baader-Meinhof phenomenon / AKA Frequency Illusion [1] [1] http://en.wikipedia.org/w/index.php?title=List_of_cognitive_biases&redirect=no#Frequency_illusion http://en.wikipedia.org/w/index.php?title=List_of_cognitive_...
  - te_platt 12y ago
    Even more pedantic - It could be ironic if he came here in a deliberate attempt to avoid more information about this case. Or maybe he was trying to show a friend how people on HN are averse to pedantic grammar related comments. Or maybe he deliberately inserted a vocabulary error so he could expose the more nit picky among us so he could hunt them down and destroy there credibility.
    - SixSigma 12y ago
      Which is why I added an interesting / informative link rather than just a nit pick. btw. obvious troll was obvious
    - jrockway 12y ago
      > maybe he deliberately inserted a vocabulary error so he could ... hunt them down and destroy there credibility Masterful.
      - SixSigma 12y ago
        Amateurish
- jamiequint 12y ago
  That's coincidental, not ironic.
mnarayan01 12y ago
> That, as the complaint highlights, the FBI instinctively acted as Goldman's punitive arm rather than conducting an independent investigation into the facts of the case is disturbing, to say the least. needs, I think, to be taken with the following quote from your linked article: > The Web site Serge had used (which has the word “subversion” in its name) as well as the location of its server (Germany) McSwain clearly found highly suspicious. It looks like the FBI agent did "[conduct] an independent investigation into the facts"...it just wasn't a, shall we say, "good" investigation. I had intended to write that concerns about the FBI acting as "Goldman's punitive arm" seem overblown, but as I was writing I think I changed my mind. While I initially thought liability would be a sufficient way of resolving this situation, the diffuse nature of responsibility here is going to make it really hard. On the other hand, I've seen instances where Michael Lewis himself has seemed to condemn the level of care in the application of government enforcement that seems to have been called for here.
- logn 12y ago
  How can we let FBI agents get away with arresting people for using Subversion? That's hardly an investigation into facts... more like an investigation into only the first definition of words, along with a lot of jumping to conclusions.
  - andyzweb 12y ago
    I am for one, okay with people being arrested for using svn
    - PhantomGremlin 12y ago
      I'll assume you're making a joke. But keep in mind that Sergey was financially ruined and his marriage broke up. There's very little humor in that. Our government's actions weren't much different than what Putin might do in Sergey's old country of Russia. I'm sure he appreciates the irony in that.
garenp 12y ago
I can totally believe that account. The people at Goldman were probably totally sincere in their belief that he had "stolen" their magic sauce when talking to the FBI. These are presumably the same kind of people that think anything that's source code is some kind stuff that lays magical golden goose eggs, regardless of how trivial it is -- or even if it's open-source. IMHO there is a much bigger, broader problem with non-technical people in positions of influence (and even the general public!). It's this same kind of disconnect that leads to mountains of trivial patents being filed. (I can't even count how many times I've heard of an engineer being put in a situation where they're told they need to patent some of their work, regardless of whether the engineer(s) think it's worth doing.)
downandout 12y ago
Given Goldman's actions, it seems to me that additional defendants in this case should be Goldman itself for misrepresenting what was actually taken, and any Goldman employees personally involved. Additionally, those employees involved should be charged criminally for making a false statement to a federal agent.
- tptacek 12y ago
  Wait, from where are we getting the presumption that GS misrepresented what was taken? There's a meme that Aleynikov copied mostly GPL'd code, but despite Techdirt-styling reporting to that effect, the opposite turns out to be true: the court, carefully considering the notion of open-source code, found that a large portion of what Aleynikov knowingly took was proprietary and secret; along with it, Aleynikov also took confidential internal GS documentation about the connectivity their order routing system had to exchanges.
chc 12y ago
I don't completely understand the problem here. Is the FBI really expected to put their investigation on hold while they first investigate the reporter? Like, if my $X vase is stolen and I say it's worth $X, I would hope the cops don't waste a lot of time getting the missing vase appraised in absentia before they try tracking it down. Like, hopefully the FBI obeys the law and respects suspects' rights regardless of the particulars of Goldman's claim. If they're not doing that, that's a problem. But if somebody is lying to them, that's a felony they can pursue later, right?
- blackbagboys 12y ago
  To extend and correct your analogy, if you accuse your neighbor of stealing your vase, I would hope the cops spend some time investigating whether a) there was actually a vase to begin with and b) he actually took it, before they haul him off to prison. Determining whether or not a crime has actually occurred is usually an essential part of a criminal investigation.
  - abalone 12y ago
    One flaw in your analogy: The FBI doesn't "haul you off to prison". There's a criminal trial that happens in between those two points.
    - blackbagboys 12y ago
      "Jail", then.
      - abalone 12y ago
        The analogy omits the thorough criminal trial process that led to his imprisonment, suggesting it was all because the FBI didn't investigate properly. In actuality he got out because an appeals court found a loophole in the phrasing of the Economic Espionage Act -- which was immediately closed by Congress at the behest of the judge. [1] It had nothing to do with the lack of investigative thoroughness on the part of the FBI. [1] http://thomas.loc.gov/cgi-bin/query/z?r112:H18DE2-0051 http://thomas.loc.gov/cgi-bin/query/z?r112:H18DE2-0051:
artursapek 12y ago
For those interested in a more detailed account, Lewis' Flash Boys is a really great book. http://www.amazon.com/Flash-Boys-Michael-Lewis/dp/0393244660 http://www.amazon.com/Flash-Boys-Michael-Lewis/dp/0393244660
- tptacek 12y ago
  _Flash Boys_ is a terrible book. It's incoherent, very poorly ties the narrative about this case to HFT, gets a lot of trading details wrong, and makes an underdog story out of an attempt by a bunch of bigbank insiders to route bigbank brokerage trade through their new firm. If you're interested in the technical story behind HFT, a much better thing to read is that series of articles that's been running on HN for the last few months. I'm a Michael Lewis fan --- I even liked _Next: The Future Just Happened_ --- but this book was so disappointing I've actually become disillusioned. What else was he wrong about that I wasn't clued in enough to notice? Do Greek people in reality try hard to pay their taxes? Was Chad Bradford a terrible deal for the A's? Was Marillion a terrible band?
arca_vorago 12y ago
This is one of the main problems with LEA's as it stands today, namely the fact that while many have heard about the mass privatization of the prison system, many don't realize that effective privatization of LEA's is happening. To me this is especially dangerous because the LEO's increasingly will end up failing to protect people from companies but will almost always try to do the opposite, in blatant disregard for their purpose and oaths. Also, much of the workers rights we have today are because of workers pushing back against such tactics. I feel like the people have forgotten how we got to the 8 hour day we are at, and when we forget history we tend to end up repeating it. https://en.wikipedia.org/wiki/Ludlow_Massacre https://en.wikipedia.org/wiki/Ludlow_Massacre
rayiner 12y ago
The opinion vacating Aleynikov's convictions is here: http://www.ca2.uscourts.gov/decisions/isysquery/4ad04a2b-c61e-4e5f-afec-5cd56fd0d0cb/1/doc/11-1126_complete_opn.pdf http://www.ca2.uscourts.gov/decisions/isysquery/4ad04a2b-c61.... "Aleynikov’s last day at Goldman was June 5, 2009. At approximately 5:20 p.m., just before his going-away party, Aleynikov encrypted and uploaded to a server in Germany more than 500,000 lines of source code for Goldman’s HFT system, including code for a substantial part of the infrastructure, and some of the algorithms and market data connectivity programs." [Page 5]. "Aleynikov also transferred some open source software licensed for use by the public that was mixed in with Goldman's proprietary code. However, a substantially greater number of the uploaded files contained proprietary code than had open source software." [Page 5, Footnote 1]. He was convicted for violating the NSPA (National Stolen Property Act) and the EEA (Economic Espionage Act). The conviction for the former was vacated because the Second Circuit construed the NSPA not to extend to intangible property. [Page 18-19]. And the EEA conviction was vacated because the statute requires the product to be "produced for" or "placed in" interstate commerce, while Goldman never intended to sell or license the software. [Page 27]. The Court concluded that he had in fact tried to take 500,000 lines of valuable and mostly proprietary source code, but that his conduct didn't fall within the reach of the two laws charged in the indictment. Solid legal analysis, but an ordinary person would say that he got off on a technicality. Which is fine--if you can lawyer your way out of a conviction, you deserve to. But help me understand what the FBI did wrong, or Goldman for that matter. The legal questions that were resolved in Aleynikov's favor were subtle ones. How would additional investigation on the part of the FBI have helped? And what exactly did Goldman do wrong in reporting him?
- rev_bird 12y ago
  I think the most troubling part was that a huge, powerful company can get a government agency on the phone and have someone locked up based pretty much exclusively on them saying "You won't understand why, but he did really bad stuff. Trust us."
  - rayiner 12y ago
    But it wasn't just based on Goldman's word: > Then [the FBI agent] explained what he knew, or thought he knew: in April 2009, Serge had accepted a job at a new high-frequency-trading shop called Teza Technologies, but had remained at Goldman for the next six weeks, until June 5, during which time he sent himself, through a so-called “subversion repository,” 32 megabytes of source code from Goldman’s high-frequency stock-trading system. Lewis weaves a lot of editorializing and red-herrings into the account, but here's the punchline: > All of which was true, as far as it went... Nobody disputes that at the time Aleynikov was arrested, the FBI had evidence that he had sent himself a bunch of source code and covered his tracks. And at trial, the prosecution proved that he had in fact done that. So what the heck else was the FBI supposed to do?

deleted 12y ago

[deleted]

SixSigma 12y ago
That's not irony, it's coincidence. Possibly even Baader-Meinhof phenomenon / AKA Frequency Illusion [1] [1] http://en.wikipedia.org/w/index.php?title=List_of_cognitive_biases&redirect=no#Frequency_illusion http://en.wikipedia.org/w/index.php?title=List_of_cognitive_...
- te_platt 12y ago
  Even more pedantic - It could be ironic if he came here in a deliberate attempt to avoid more information about this case. Or maybe he was trying to show a friend how people on HN are averse to pedantic grammar related comments. Or maybe he deliberately inserted a vocabulary error so he could expose the more nit picky among us so he could hunt them down and destroy there credibility.
  - SixSigma 12y ago
    Which is why I added an interesting / informative link rather than just a nit pick. btw. obvious troll was obvious
  - jrockway 12y ago
    > maybe he deliberately inserted a vocabulary error so he could ... hunt them down and destroy there credibility Masterful.
    - SixSigma 12y ago
      Amateurish
jamiequint 12y ago
That's coincidental, not ironic.

mnarayan01 12y ago

> That, as the complaint highlights, the FBI instinctively acted as Goldman's punitive arm rather than conducting an independent investigation into the facts of the case is disturbing, to say the least. needs, I think, to be taken with the following quote from your linked article: > The Web site Serge had used (which has the word “subversion” in its name) as well as the location of its server (Germany) McSwain clearly found highly suspicious. It looks like the FBI agent did "[conduct] an independent investigation into the facts"...it just wasn't a, shall we say, "good" investigation. I had intended to write that concerns about the FBI acting as "Goldman's punitive arm" seem overblown, but as I was writing I think I changed my mind. While I initially thought liability would be a sufficient way of resolving this situation, the diffuse nature of responsibility here is going to make it really hard. On the other hand, I've seen instances where Michael Lewis himself has seemed to condemn the level of care in the application of government enforcement that seems to have been called for here.

logn 12y ago
How can we let FBI agents get away with arresting people for using Subversion? That's hardly an investigation into facts... more like an investigation into only the first definition of words, along with a lot of jumping to conclusions.
- andyzweb 12y ago
  I am for one, okay with people being arrested for using svn
  - PhantomGremlin 12y ago
    I'll assume you're making a joke. But keep in mind that Sergey was financially ruined and his marriage broke up. There's very little humor in that. Our government's actions weren't much different than what Putin might do in Sergey's old country of Russia. I'm sure he appreciates the irony in that.

garenp 12y ago

I can totally believe that account. The people at Goldman were probably totally sincere in their belief that he had "stolen" their magic sauce when talking to the FBI. These are presumably the same kind of people that think anything that's source code is some kind stuff that lays magical golden goose eggs, regardless of how trivial it is -- or even if it's open-source. IMHO there is a much bigger, broader problem with non-technical people in positions of influence (and even the general public!). It's this same kind of disconnect that leads to mountains of trivial patents being filed. (I can't even count how many times I've heard of an engineer being put in a situation where they're told they need to patent some of their work, regardless of whether the engineer(s) think it's worth doing.)

downandout 12y ago

Given Goldman's actions, it seems to me that additional defendants in this case should be Goldman itself for misrepresenting what was actually taken, and any Goldman employees personally involved. Additionally, those employees involved should be charged criminally for making a false statement to a federal agent.

tptacek 12y ago
Wait, from where are we getting the presumption that GS misrepresented what was taken? There's a meme that Aleynikov copied mostly GPL'd code, but despite Techdirt-styling reporting to that effect, the opposite turns out to be true: the court, carefully considering the notion of open-source code, found that a large portion of what Aleynikov knowingly took was proprietary and secret; along with it, Aleynikov also took confidential internal GS documentation about the connectivity their order routing system had to exchanges.

chc 12y ago

I don't completely understand the problem here. Is the FBI really expected to put their investigation on hold while they first investigate the reporter? Like, if my $X vase is stolen and I say it's worth $X, I would hope the cops don't waste a lot of time getting the missing vase appraised in absentia before they try tracking it down. Like, hopefully the FBI obeys the law and respects suspects' rights regardless of the particulars of Goldman's claim. If they're not doing that, that's a problem. But if somebody is lying to them, that's a felony they can pursue later, right?

blackbagboys 12y ago
To extend and correct your analogy, if you accuse your neighbor of stealing your vase, I would hope the cops spend some time investigating whether a) there was actually a vase to begin with and b) he actually took it, before they haul him off to prison. Determining whether or not a crime has actually occurred is usually an essential part of a criminal investigation.
- abalone 12y ago
  One flaw in your analogy: The FBI doesn't "haul you off to prison". There's a criminal trial that happens in between those two points.
  - blackbagboys 12y ago
    "Jail", then.
    - abalone 12y ago
      The analogy omits the thorough criminal trial process that led to his imprisonment, suggesting it was all because the FBI didn't investigate properly. In actuality he got out because an appeals court found a loophole in the phrasing of the Economic Espionage Act -- which was immediately closed by Congress at the behest of the judge. [1] It had nothing to do with the lack of investigative thoroughness on the part of the FBI. [1] http://thomas.loc.gov/cgi-bin/query/z?r112:H18DE2-0051 http://thomas.loc.gov/cgi-bin/query/z?r112:H18DE2-0051:

artursapek 12y ago

For those interested in a more detailed account, Lewis' Flash Boys is a really great book. http://www.amazon.com/Flash-Boys-Michael-Lewis/dp/0393244660 http://www.amazon.com/Flash-Boys-Michael-Lewis/dp/0393244660

tptacek 12y ago
_Flash Boys_ is a terrible book. It's incoherent, very poorly ties the narrative about this case to HFT, gets a lot of trading details wrong, and makes an underdog story out of an attempt by a bunch of bigbank insiders to route bigbank brokerage trade through their new firm. If you're interested in the technical story behind HFT, a much better thing to read is that series of articles that's been running on HN for the last few months. I'm a Michael Lewis fan --- I even liked _Next: The Future Just Happened_ --- but this book was so disappointing I've actually become disillusioned. What else was he wrong about that I wasn't clued in enough to notice? Do Greek people in reality try hard to pay their taxes? Was Chad Bradford a terrible deal for the A's? Was Marillion a terrible band?

arca_vorago 12y ago

This is one of the main problems with LEA's as it stands today, namely the fact that while many have heard about the mass privatization of the prison system, many don't realize that effective privatization of LEA's is happening. To me this is especially dangerous because the LEO's increasingly will end up failing to protect people from companies but will almost always try to do the opposite, in blatant disregard for their purpose and oaths. Also, much of the workers rights we have today are because of workers pushing back against such tactics. I feel like the people have forgotten how we got to the 8 hour day we are at, and when we forget history we tend to end up repeating it. https://en.wikipedia.org/wiki/Ludlow_Massacre https://en.wikipedia.org/wiki/Ludlow_Massacre

rayiner 12y ago

The opinion vacating Aleynikov's convictions is here: http://www.ca2.uscourts.gov/decisions/isysquery/4ad04a2b-c61e-4e5f-afec-5cd56fd0d0cb/1/doc/11-1126_complete_opn.pdf http://www.ca2.uscourts.gov/decisions/isysquery/4ad04a2b-c61.... "Aleynikov’s last day at Goldman was June 5, 2009. At approximately 5:20 p.m., just before his going-away party, Aleynikov encrypted and uploaded to a server in Germany more than 500,000 lines of source code for Goldman’s HFT system, including code for a substantial part of the infrastructure, and some of the algorithms and market data connectivity programs." [Page 5]. "Aleynikov also transferred some open source software licensed for use by the public that was mixed in with Goldman's proprietary code. However, a substantially greater number of the uploaded files contained proprietary code than had open source software." [Page 5, Footnote 1]. He was convicted for violating the NSPA (National Stolen Property Act) and the EEA (Economic Espionage Act). The conviction for the former was vacated because the Second Circuit construed the NSPA not to extend to intangible property. [Page 18-19]. And the EEA conviction was vacated because the statute requires the product to be "produced for" or "placed in" interstate commerce, while Goldman never intended to sell or license the software. [Page 27]. The Court concluded that he had in fact tried to take 500,000 lines of valuable and mostly proprietary source code, but that his conduct didn't fall within the reach of the two laws charged in the indictment. Solid legal analysis, but an ordinary person would say that he got off on a technicality. Which is fine--if you can lawyer your way out of a conviction, you deserve to. But help me understand what the FBI did wrong, or Goldman for that matter. The legal questions that were resolved in Aleynikov's favor were subtle ones. How would additional investigation on the part of the FBI have helped? And what exactly did Goldman do wrong in reporting him?

rev_bird 12y ago
I think the most troubling part was that a huge, powerful company can get a government agency on the phone and have someone locked up based pretty much exclusively on them saying "You won't understand why, but he did really bad stuff. Trust us."
- rayiner 12y ago
  But it wasn't just based on Goldman's word: > Then [the FBI agent] explained what he knew, or thought he knew: in April 2009, Serge had accepted a job at a new high-frequency-trading shop called Teza Technologies, but had remained at Goldman for the next six weeks, until June 5, during which time he sent himself, through a so-called “subversion repository,” 32 megabytes of source code from Goldman’s high-frequency stock-trading system. Lewis weaves a lot of editorializing and red-herrings into the account, but here's the punchline: > All of which was true, as far as it went... Nobody disputes that at the time Aleynikov was arrested, the FBI had evidence that he had sent himself a bunch of source code and covered his tracks. And at trial, the prosecution proved that he had in fact done that. So what the heck else was the FBI supposed to do?