Aleynikov goes free
Count me in, with Choire Sicha, as being very happy that Sergey Aleynikov is once again a free man. To cut a long story short, Aleynikov used to work in high-frequency trading for Goldman Sachs, earning $400,000 a year. He then got offered a job in Chicago, earning three times that amount.
Context & Ripple Effects
Sergey Aleynikov, the former Goldman Sachs high-frequency-trading programmer prosecuted for taking code when he left for a Chicago job paying three times his $400,000 salary, has had his conviction overturned and walked out of custody. The reversal drew unusually broad same-day pickup — DealBook, Wired, Forbes and The Awl all carried it — reflecting how closely the finance-and-technology press was watching a bank use criminal law against a departing engineer.
First-order effects
- Aleynikov is immediately free, and the federal conviction in Goldman Sachs's criminal case against him is voided pending whatever the prosecution decides next.
- Goldman Sachs loses the centerpiece of its effort to treat an ex-employee's code transfer as a federal crime rather than an internal or civil matter.
Second-order effects
- Banks and trading firms weighing criminal referrals against departing quant developers now face a demonstrated appellate risk, pushing disputes toward civil trade-secret claims instead.
- The threefold pay jump that triggered the case is a data point in the bidding war for high-frequency-trading talent, where an engineer's head carries the firm's most valuable code.
Third-order effects
- If the pattern holds, Wall Street's default response to code walking out the door shifts from prosecutors to intellectual-property litigation, and the boundary between proprietary source code and ordinary engineer mobility gets tested case by case.
The trend: Financial firms are learning that criminal prosecution of departing programmers is fragile, pushing trade-secret fights over trading code toward civil courts.