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Programmer cleared of stealing code from Goldman Sachs

Sergey Aleynikov has conviction dismissed out of hand by appeal judges after serving a year for copying trading software

A former Goldman Sachs computer programmer has been freed from prison after a surprise ruling from a federal appeals court quashed his conviction for stealing computer code.

“Justice occasionally works,” said Russian-born Sergey Aleynikov, who walked free after serving one year out of a sentence of eight years or more.

Aleynikov, a naturalised US citizen who emigrated from Russia in 1990, was first arrested in July 2009 as he returned from a trip to Chicago to the offices of his new employer, Teza Technologies LLC.

Prosecutors accused him of taking trade secrets from Goldman Sachs in 2008 to help his new company gain an advantage with high-speed financial trading.

During a two-week trial, defence lawyer Kevin Marino told jurors that his client had merely tried to copy parts of the company’s software that came from public software code anyway. He acknowledged that Aleynikov had violated the company’s confidentiality agreements but argued that was a civil matter.

Aleynikov was found guilty in December 2010 and sentenced to jail the following March.

In the appeal, Marino told a three-judge panel that Aleynikov had been wrongly convicted.

The highly unusual immediate dismissal of a conviction by the appeals court came in a case that tested the boundaries of what can be considered a crime as companies seek to protect their intellectual property from competitors.

A three-judge appeals panel heard arguments on Thursday but the judges gave no indication they would overturn the lower court verdict hours later with a terse, one-paragraph order. The court said it would issue a written ruling “in due course” to explain its decision.

Marino said: “It’s justice because Sergey Aleynikov did not commit either of the crimes with which he was charged. The government’s attempt to stretch this criminal federal statute beyond all recognition resulted in a grave injustice that put Sergey Aleynikov in prison for a year.”

In oral arguments before the court, Marino called it “ridiculous” and “preposterous” that his client was facing eight years in prison because he was found to have information that was not a product that Goldman Sachs sold in interstate and foreign commerce. A prosecutor had asked the court to uphold the conviction, saying protection of trade secrets was the only way companies could retain their technological advantages.

Prosecutors have declined to comment. They agreed during a court appearance that Aleynikov could be released without conditions while everyone awaited the full appeals court opinion, unlikely to be released for weeks.

The trial brought into focus sophisticated computer programs that use mathematical formulae to execute scores of trades in short periods of time after evaluating moment-to-moment developments in the markets.

The government argued Goldman Sachs makes millions of dollars a year in profits from high-frequency trading and carries a competitive advantage over rivals because of the speed of its computer programs.

At sentencing, Aleynikov said he very much regretted “the foolish decision to download information before I left Goldman Sachs”, though he added that only some of the information he took was proprietary to the company.

He said he “never meant to cause Goldman any harm and I haven’t acted with malice to anyone at the bank”.

After he was freed Aleynikov said he did not have access to a computer in the prison but had continued to write computer programs “in my head”. © 2012 Guardian News and Media Limited or its affiliated companies. All rights reserved. | Use of this content is subject to our Terms & Conditions | More Feeds