

Court Overturns Conviction of Ex-Goldman Programmer - kanamekun
http://dealbook.nytimes.com/2012/02/17/court-overturns-conviction-of-ex-goldman-programmer/

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hieronymusN
It appears his acquittal was based on a technicality (language within the
Economic Espionage Act) and he has pretty much admitted that he did something
wrong (uploaded it to a server in Germany to bypass Goldman's security):

    
    
      At trial, Mr. Marino, the lawyer for Mr. Aleynikov,
      acknowledge that his client breached Goldman’s
      confidentiality agreements, but insisted that he did not
      commit a crime.
    

So, it would seem that Goldman should rightly be rather upset about this, as
much as I dislike Goldman, they seem to be in the right here?

~~~
tpatke
I used to work at Goldman's and I can tell you that they will be absolutely
furious about this. I have never worked at a company so paranoid about having
work stolen. Once - a friend of mine sent me an email with a tag-line with a
bit of code in it. When I replied the email filters picked it up and I had to
explain to my boss why I was trying to "export" Goldman's code. They are nuts
about it.

Goldman put a lot of time and energy into making an example out of this guy.
He blatantly "did it" - they had recorded phone conversations of him talking
to his new boss and uploading code immediately after. I know the details
because we received almost weekly reports on the case via the corporate
intranet (in the "news" section). Goldman wants their people scared so nobody
else tries this.

I always found it a bit odd because the court sentenced this guy to 8 years.
Ummm... ok. But why is Fabrice Tourre still walking around? Justice indeed.

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spinlock
Forget Fabrice Tourre, how about John Corzine? The government isn't even going
to use the law _that he created_ to go after him for stealing client money.

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illumin8
What bothers me more about this particular case is that Goldman's attorneys
claimed that this code could be used to manipulate the market, and yet the SEC
did nothing to investigate.

You have documented court testimony of a market participant (Goldman) claiming
they have the ability to manipulate the market. This should be a slam dunk if
we had regulators with anything remotely resembling balls.

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ig1
You misunderstand, knowing how someone else is going to trade allows you to do
market manipulation, knowinf how you are going to trade yourself obviously
doesn't help you do market manipulation

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staunch
GOOD. Fuck Goldman for being able to sic the FBI on an ex-employee who went to
a competitor. If he copied code that's obviously a civil matter. How many tech
companies have had the same thing happened to them? How many did the FBI get
involved in? Close to zero I'd guess over 40 years.

They get special treatment from law enforcement because they're rich,
powerful, and connected. It was a total travesty that the FBI even became
involved in the first place.

Not that I'm justifying his actions. He did wrong and there should be
consequences -- but Goldman _shouldn't_ get to use the FBI as their enforcers.

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gsibble
Even if he violated confidentiality agreements, wouldn't that be a civil
violation instead of a criminal one? Why is the federal government prosecuting
what should be a civil case?

~~~
pja
GS wanted an example made, so they got the FBI to prosecute. 8 years inside
makes for a really big stick to wave in front of the rest of their programmer
base.

Unfortunately for them, the court has ruled that the statute in question
didn't apply, so the ruling has been reversed. Assuming double jeopardy
applies, he can't be prosecuted (by the government) again for the same acts. I
_think_ that GS could still sue for breach of contract, but their damages
would presumably be limited to actual harm done wouldn't they?

~~~
fleitz
They could be but they could seek punitive damages and/or treble damages.
Honestly, in the case of getting sued by GS costs are probably the biggest
factor.

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msutherl
How would you go about stealing code from Goldman without being detected?

~~~
mickey7
understand it and replicate it

~~~
veyron
Cannot be emphasized enough. They can get you for copying code but not for
reimplementing functionality if you understood how it was implemented.

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jemfinch
It seems like they can trivially retry him under criminal copyright
infringement laws. Is there some technicality preventing the justice
department from pursuing that course?

Does anyone know if Goldman is simultaneously pursuing civil resource for
copyright violation?

~~~
pja
Double jeopardy applies here doesn't it? You don't get to keep prosecuting
people for one act until one of the cases sticks: You have to pick one breach
of the law, or bundle a bunch of them into a single prosecution, and go to
court on that basis don't you?

~~~
setrofim_
IIRC, double jeopardy doesn't stop both criminal and civil charges from being
filed for the same offense (it only applies to being criminally charged
multiple times)?

~~~
pja
You're right (I think), so GS could go after him for breach of contract and/or
copyright infringement but not any of the criminal offences that were
originally available to them (including the copyright related ones).

Given that their return might be limited to their provable losses & that
they'd have to demonstrate those in court I suspect that they'll probably
decide it's not worth the effort. The guy has already spent a year in prison
after all & they've successfully demonstrated to all their other employees
that GS will go for the maximum possible sentence if any of them transgress in
the future, which was probably the main point of the whole exercise in the
first place.

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mjwalshe
Well I can't see how any "resonable" operson would not say that a trading
platform used in an international and across state boundarys is not a “product
produced for interstate commerce”

This is one of those bonkers decisions by judges a bit like the famous Prince
Philip Prestel Hack back in the 70's

Basicaly the judgement was that an electronic key is compeltly diferent to a
physical one - WTF!

I used to work for the guy who had been in charge of that system

~~~
_delirium
The disagreement, from what I can tell in this brief summary with no opinion
out yet, doesn't seem to be over the "interstate" part so much as the
"product" part. The federal government's Constitutional commerce-clause power
almost certainly includes the ability to regulate platforms like this Goldman
platform, since it's heavily tied up in interstate (and international)
commerce. But the wording of this _particular_ criminal law, the Economic
Espionage Act, arguably applies only to "products" sold in interstate
commerce, not internal software that isn't for sale anywhere, even if used
internally for purposes closely tied up with interstate commerce. At least,
that's what his lawyers appear to have successfully argued.

~~~
tzs
I haven't read the court's decision to see exactly what part of the statute
the guy was charged under and the court said did not apply, but the wording of
the part that looks like it would be the right part says:

    
    
       Whoever, with intent to convert a trade secret, that is related
       to or included in a product that is produced for or placed in
       interstate or foreign commerce
    

I'd expect the internal software to qualify under the "related to" part, as it
is related to their trading product which is heavily involved in interstate
commerce.

~~~
_delirium
I read it as saying that the _trade secret_ has to be "related to" a "product
that is produced for or placed in interstate or foreign commerce". So if their
trading platform isn't "a product", and isn't itself "produced for or placed
in" interstate or foreign commerce (but only used internally), it may not
apply. Depending on what exactly "placed in" means; it seems the court
interpreted it to mean that the product had to actually be put into commercial
channels for sale, not merely used internally for commercial purposes.

