Crime & Federalism: Sergey Aleynikov Hearing on Sept 16, 2009

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Sergey Aleynikov Hearing on Sept 16, 2009

September 11, 2009

The next hearing in U.S. v. Sergey Aleynikov, the most disgraceful criminal prosecution since the Duke Lacrosse Case, will be held this coming Wednesday. While we don't know whether the charges against Aleynikov will be dismissed, there has been a related development.

Bloomberg is reporting that the SEC wants to take a look inside Wall Street's black box:

Sept. 10 (Bloomberg) -- The U.S. Securities and Exchange Commission is "rigorously" investigating whether traders are using technology to manipulate markets, the agency's enforcement and inspections chiefs said today.
The regulator is probing suspected “market manipulation based on complex use of technology and advanced trading systems,” said SEC Enforcement Director Robert Khuzami and acting examinations director John Walsh in testimony prepared for a Senate Banking Committee hearing. They said the inquiry is among a list of active cases, also including unspecified Ponzi schemes, hedge-fund abuses and insider trading.

The SEC's Keystone Cops only learned about Wall Street's ability to "unfairly manipulate markets," after Goldman Sachs had DOJ arrest Sergey:

The Goldman Sachs programmer, Sergey Aleynikov, was arrested July 3 and charged the next day with theft of trade secrets and transportation of stolen property in foreign commerce. At Aleynikov’s arraignment, Assistant U.S. Attorney Joseph Facciponti said the programmer transferred code to a computer server in Germany and that others may have had access to it, a claim Aleynikov has denied. He is free on $750,000 bond.

Unlike AUSA Facciponti, the SEC wants to know: Why should Goldman Sachs be trusted with market-manipulating software? While the SEC investigation continues, we'll know more about Sergey soon.

For the good of America, I hope the Aleynikov prosecution proceeds to trial. Aleynikov will be entitled to put Goldman Sachs' market-manipulating software on trial. We need to keep the public's eye on Wall Street. We need the public, Congress, and the Judiciary to keep an eye on the Department of Justice.

Given that the Department of Justice did nothing about Bernie Madoff for years, members of the public as well as federal judges must ask how Goldman Sachs was able to reach the FBI at 3 a.m. to report theft of computer code; and have an arrest 48 hours later. Does Goldman Sachs have a bat phone that connects to the Department of Justice? If DOJ doesn't dismiss the case against Sergey, we might just find out.

Posted at 10:36 AM in Aleynikov, Goldman Sachs | Permalink | Comments (0)

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Bloomberg is reporting that the SEC wants to take a look inside Wall Street's black box:

Sept. 10 (Bloomberg) -- The U.S. Securities and Exchange Commission is "rigorously" investigating whether traders are using technology to manipulate markets, the agency's enforcement and inspections chiefs said today.
The regulator is probing suspected “market manipulation based on complex use of technology and advanced trading systems,” said SEC Enforcement Director Robert Khuzami and acting examinations director John Walsh in testimony prepared for a Senate Banking Committee hearing. They said the inquiry is among a list of active cases, also including unspecified Ponzi schemes, hedge-fund abuses and insider trading.

The SEC's Keystone Cops only learned about Wall Street's ability to "unfairly manipulate markets," after Goldman Sachs had DOJ arrest Sergey:

The Goldman Sachs programmer, Sergey Aleynikov, was arrested July 3 and charged the next day with theft of trade secrets and transportation of stolen property in foreign commerce. At Aleynikov’s arraignment, Assistant U.S. Attorney Joseph Facciponti said the programmer transferred code to a computer server in Germany and that others may have had access to it, a claim Aleynikov has denied. He is free on $750,000 bond.

Unlike AUSA Facciponti, the SEC wants to know: Why should Goldman Sachs be trusted with market-manipulating software? While the SEC investigation continues, we'll know more about Sergey soon.