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Goldman Sachs sent a computer scientist to jail over 8MB of open source code

blog.garrytan.com

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Re: Goldman Sachs sent a computer scientist to jail over 8MB of open source code

#61

Post by chrisbennet »

From the comments: "Why are you putting him in jail? Again, Goldman has no ability to put people in jail. Only the justice system does. Why this kind of narrative continues to be OK with people, I have no idea."

This justice system didn't decide out the blue to go after Aleynikov one day. G.S. asked them to do it. I suppose if you work for G.S. you need to be very good at rationalizing things in order to sleep it at night.

If I worked for G.S. I would probably tell myself: "G.S. doesn't cause the starvation of millions of people, we just speculate on food commodities." (Google "goldman sach starvation")

Re: Goldman Sachs sent a computer scientist to jail over 8MB of open source code

#62

Post by dopamean »

nikcub wrote: post #22

The most interesting part of the reaction from the Vanity Fair piece for me is how so many geeks had no idea of this story until it was spelled out to them by a mainstream magazine (even though the Aleynikov case was extensively covered here on HN). Now would be a good time to highlight the cases of hackers that Michael Lewis doesn't have time to write about: Bo Zhang, Michael Meneses, the Madoff programmers, John Ka…

What's the story with the guys who worked for Madoff? I've heard nothing of this.

Re: Goldman Sachs sent a computer scientist to jail over 8MB of open source code

#63

Post by ig1 »

tankenmate wrote: post #59
ig1 wrote: post #42

Earlier quoted context omitted.

According to the indictment the source code included Goldman's propriety stock option pricing algos.

But the Vanity article explicitly states that the "Jury" asked him whether he took the strats (the trading strategies) and he said "No."; the response from the "Jury" was telling, they said "Why not take the valuable stuff?"

Pricing algorithms are different from trading strategies (although they're obviously related). In any case that's purely a matter of evidence, he either copied a piece of code or he didn't.

Re: Goldman Sachs sent a computer scientist to jail over 8MB of open source code

#64

Post by w_t_payne »

jhuckestein wrote: post #25

I love to stick it to Goldman as much as anyone else here, but I think the story is probably more nuanced than "Goldman jails innocent programmer for leaving the firm". I know that I have on occasion kept copies of source code for projects that I'm proud of (and there was often some open source code involved; that changes nothing). Not to give it to someone else, but because I was proud of the work. That is probably…

The developer was not innocent:- but the punishment was disproportionate and heavy-handed, considering that he did not appear to have made use of the source code that was taken.

The major problems raised by the story lie firstly in the technological ignorance that the authorities displayed; secondly in the developer's legal ignorance (in trying to correct the authorities' technical ignorance) and finally, and perhaps most importantly, in the breathtaking arrogance and conceit displayed by GS in it's handling of the case -- yet more evidence (as if we needed it) of the vile, corrosive, and fundamentally corrupt culture that infects our financial services.

Re: Goldman Sachs sent a computer scientist to jail over 8MB of open source code

#65

Post by speeder »

nikcub wrote: post #22

The most interesting part of the reaction from the Vanity Fair piece for me is how so many geeks had no idea of this story until it was spelled out to them by a mainstream magazine (even though the Aleynikov case was extensively covered here on HN). Now would be a good time to highlight the cases of hackers that Michael Lewis doesn't have time to write about: Bo Zhang, Michael Meneses, the Madoff programmers, John Ka…

Can you provide links? I never heard of any of those cases!!!

Re: Goldman Sachs sent a computer scientist to jail over 8MB of open source code

#66

Post by shubb »

Unosolo wrote: post #58
mathattack wrote: post #47

Earlier quoted context omitted.

It was stealing proprietary code that could have cost Goldman hundreds of millions of dollars.

To me it is not clear why stealing the proprietary code could have cost CG hundreds of millions of dollars. Proprietary code that wasn't developed and tested with generic requirements in mind can rarely be economically re-used outside of the original company context, as it reflects the structure and the processes of the mother-company. In fact most organisations I know decided to throw away their code base entirely w…

I understand that high frequency trading algorithms are often predatory, identifying other algorithms making trades, and exploiting their known behavior to trick them into making bad decisions.

Although it may not be the case here, one can imagine that this source would let you fingerprint the Goldman algorithms, and give you an idea of the way they make decisions. That might allow one of these automatic con man algorithms to steal a huge amount of money.

In this instance, the case is more likely that Goldman payed the programmer a million a year to deliver software that gave them a competitive advantage (of significantly more than they paid). By taking that software, he removes the competitive advantage they bought from him.

Let me ask a question:

Imagine you paid an online contractor to write you software. Maybe you paid them to make an Ap idea, or a website. Under what circumstances would you object to them putting the whole thing on a public github? What harm could it do you? That harm, amplified by the money involved, is Goldmans case.

Re: Goldman Sachs sent a computer scientist to jail over 8MB of open source code

#67

Post by adambratt »

I'm reposting one of the comments from the blog here for a bit more exposure. I think this gives a good alternative viewpoint on the case:

"I worked literally side by side with Serge while at Goldman Sachs, so I have substantial perspective on this. Let's be clear -- Goldman Sachs did not pursue him, the relevant district attorney of NY did. Goldman's job is not to prosecute, it is to provide the facts of the case to the judicial system, which decides whether to go after him or not. We can argue about whether the punishment was excessive but let's stop blaming a firm that is a private company which has no ability to prosecute. And I can tell you that what Serge did was incredibly against the terms of his employment agreement. The open source aspect is overblown, obviously if it were freely available and not substantially different he would have no need to upload it days before he left. The fact of the industry is people steal code all the time, he just happened to be one of the unfortunate programmers to be caught and made an example of. But it certainly doesn't mean he's a victim here. When a company is paying you 500k+ a year to write code on its time, the understanding is that they have the say as to what happens to it, not you. You can't just say, I don't think this is that materially different so I'm going to send it to myself before I work for a competitor."

Re: Goldman Sachs sent a computer scientist to jail over 8MB of open source code

#68

Post by jrochkind1 »

ivan_gammel wrote: post #50

This guy has made two mistakes: 1. He used OS code without consulting first with legal departament of the company. 2. Transferred the source code outside the corporate network without consulting first with legal departament. His boss may be not competent in this field, but the legal departament must be and, I beleive, they already have a policy for OS solutions. This developer made a measurable damage to the company,…

There are many good reasons to sue him... but, in theory, in the US you can't send someone to jail for a simple breach of contract or violation of corporate policies about OS, or even breach of an NDA or non-compete (neither of which he had).

Re: Goldman Sachs sent a computer scientist to jail over 8MB of open source code

#69

Post by mathattack »

tankenmate wrote: post #57
mathattack wrote: post #47

Earlier quoted context omitted.

It was stealing proprietary code that could have cost Goldman hundreds of millions of dollars.

Bold statements require bold proof. Care to share?

Without having sat on the jury, I will have to rely on public documents for the relative size of Goldman's proprietary business. This may not meet your standard of proof. After the Volcker rule, it has become much tougher to find data on principal transactions, so let's go back to 2010 and look at the Financials of their annual review.

http://www.goldmansachs.com/investor-relations/financials/cu...

On page 58 of the document (page 91 of the footnotes, since it starts at 34) revenues from "Other principal transactions" is $6+ billion for the year. Revenue from "Market Making" is $13+ billion. It can be murky where this activity falls, but it's definitely one of those buckets.

On page 69(102) you get a breakout of which product areas these come from. Without going too deep, it's just worth observing that it's multiple billions of dollars of risk across each of these area.

Going to another source, on page 3 of this paper (http://repository.upenn.edu/cgi/viewcontent.cgi?article=1689...) they quote Goldman estimating the size of High Frequency Trading to be $0.5 billion in revenues, with others estimating it to be $1.5 to $3 billion.

Do I know enough to say how much of this he was accountable for? Enough that he would get a big offer to work somewhere else. And I am very confident that he knew that copying this model was against the law. Everyone in this type of environment knows this.

Re: Goldman Sachs sent a computer scientist to jail over 8MB of open source code

#70

Post by mathattack »

Unosolo wrote: post #58
mathattack wrote: post #47

Earlier quoted context omitted.

It was stealing proprietary code that could have cost Goldman hundreds of millions of dollars.

To me it is not clear why stealing the proprietary code could have cost CG hundreds of millions of dollars. Proprietary code that wasn't developed and tested with generic requirements in mind can rarely be economically re-used outside of the original company context, as it reflects the structure and the processes of the mother-company. In fact most organisations I know decided to throw away their code base entirely w…

There's two reasons here...

1) As was mentioned by Shubb, there is a predatory aspect to algorithms. If I know how your algorithm will work, I can create one that will be it. You can think of it as programming robots to fight. If I've seen the source code for your robot, I may be able to program one that can exploit it's weaknesses. (Worked against the Death Star!)

2) The HFT world works best when the ideas aren't well known. Let's say I identify a mispricing. It could be, "When this Mutual Fund moves, this similar ETF moves 0.1ms later, and these stocks react to the EFT and move 0.2ms later, but they forget these other 3 stocks 0.3ms later, so actively long those stocks for 0.3ms, and short the rest, and reverse after the time is up." No need to dwell on the details, just understand that it exists. If only one person has identified this mispricing, there are a lot of pennies to be swept up. As soon as two people know about it, the game is up.

While this type of competition could conceivably be good for the market as a whole, it's definitely not good for ther person with the algorithm.

If I have the code, perhaps I can deduce the algorithm.

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