Aleynikov's Ripple Effect

Anthony Malakian, US Editor, WatersTechnology

This week Michael Lewis brought a national spotlight to the Goldman Sachs case against Sergey Aleynikov. Will this change the way programmers conduct business in the future?

It's not often that the lives of programmers make national headlines, much less draw the interest of Vanity Fair and Michael Lewis. But in this month's issue of VF, Lewis took up the defense of Sergey Aleynikov, a former star programmer at Goldman Sachs who ended up being the only person from the firm to find himself behind bars─even though he had nothing to do with the firm's role in the financial meltdown or subprime mortgage securities fiasco.

It's an interesting read, as you'd expect from Lewis─who, himself, once worked at Salomon Brothers. My question is this: Did the trial and conviction of Aleynikov give you pause, or, as Lewis wrote, send a shiver down your spine? From Lewis:

Like most Wall Street people, they were naturally cynical, of both Goldman Sachs and Serge Aleynikov. They'd followed his case in the newspapers and noted the shiver it had sent down the spines of Wall Street's software developers. Until Serge was sent to jail for doing it, Wall Street programmers routinely took code they had worked on when they left for new jobs. "A guy got put in jail for taking something no one understood," as one of them put it. "Every tech programmer out there got the message: Take code and you could go to jail. It was huge."

The crux of Aleynikov's argument─and I understand that this is to vastly simplify an extraordinarily complex issue─is that he was taking code that contained both open-source and non-open-source code, which would've been proprietary to Goldman. He says that this is commonplace and he was only looking to unravel the two sets of codes to take out the open-source pieces for future reference. Goldman says that once the code was brought into its system, it became proprietary to Goldman. (There are probably patent and licensing laws at play here that I have no clue about, but to me it sounds like Goldman, itself, was in violation of open source licensing laws.)

Fast forward, Aleynikov decides to leave Goldman for a prop shop (Teza Technologies) that was building its own high-frequency trading platform. Goldman says that Aleynikov was trying to take the code to replicate Goldman's systems at Teza. Aleynikov says that Goldman's code─based off legacy systems─wouldn't even work in Teza's built-from-scratch platform. And it should also be noted that Aleynikov had been sending code to himself the whole time that he worked at Goldman, without ever hearing a peep that this was frowned upon, much less a violation that would warrant an arrest by the Federal Bureau of Investigation.

At the end of the day, Goldman sounds like a jilted lover─but in this case, it meant that Aleynikov was found guilty in a court of law and sent to jail. (Again, the most galling aspect of this story being that the only Goldman guy to get time in the clink is a programmer who had nothing to do with the financial collapse.)

This case has likely sent shockwaves throughout the programmer community. The punishment levied on Aleynikov was heavy-handed, especially considering the FBI's involvement─and general ignorance of programming conventions─in the takedown. As Aleynikov alludes to in the story, what he did felt more like speeding─doing 80 miles per hour on the highway when the speed limit is 65. Sure, it's technically against the law, but most everybody is doing it, it's a ticket-able offense and it's not like you stole the car or did a hit-and-run.

I'm not a programmer and I have no clue how commonplace Aleynikov's actions were. But a message has clearly been sent and it's seemingly two-fold. First, as has always been the case─so it's more of a reminder─the mightiest Wall Street firms hold all the power.

The second is that it would appear─in cases involving the taking of codes─you're guilty until proven innocent. Quite frankly, there are few juries that could understand the intricacies of coding, much less how those codes could be used in a high-frequency trading platform.

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