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Bail set at $750,000 for ex-Goldman programmer
NEW YORK (Reuters) - A former Goldman Sachs computer programer accused of stealing secret trading codes from the investment bank was being held in federal custody on Monday, pending the posting of $750,000 bail.
Sergey Aleynikov, 39, was ordered by U.S. Magistrate Kevin Nathaniel Fox in Manhattan on Saturday to post a $750,000 personal recognizance bond to be secured by three financially responsible people.
The bond also was to include $75,000 in cash, and Aleynikov was ordered to surrender his passport.
Aleynikov, a Russian immigrant living in New Jersey, was arrested on Friday night by FBI agents at Newark Liberty International Airport after returning from Chicago, according to court documents.
He is accused of "theft of trade secrets" related to computer codes used for automated stock and commodities trading at an unspecified financial institution.
Sources familiar with the situation have told Reuters columnist Matthew Goldstein that the financial institution is Goldman Sachs.
A Goldman representative declined to comment on Monday. A lawyer for Aleynikov, Sabrina Shroff, also declined to comment.
Authorities contend that Aleynikov improperly copied a financial institution's proprietary computer code and then uploaded it to a computer server in Germany.
In court papers, an FBI agent said Aleynikov worked at an unspecified financial institution as a programer from May 2007 until June 5, when he left to work for a new company focused on high-volume automated trading.
The case could shed light on the intricate trading systems developed by Goldman, and also raises questions about the security of Wall Street's proprietary trading operations.
Aleynikov's wife, Elina, told Reuters on Sunday that her husband is innocent.
Speaking in a phone interview from the couple's New Jersey home, she said her husband worked hard for Goldman and has been a good citizen who has lived in the United States for 19 years.
Aleynikov was being held at the Metropolitan Detention Center in Brooklyn as of Monday morning, according to the federal Bureau of Prisons website and an officer at the jail.
It Is Time For The SEC/NYSE To Respond To The NASDAQ's SLP Clarification Requests
Now that Goldman and the NYSE's Supplemental Liquidity Provider program have finally attracted a critical mass of necessary (and hopefully sufficient) public attention, Zero Hedge would like to readdress an overlooked complaint in which none other than the NASDAQ Stock Market LLC vociferously blasts the NYSE, the SLP program, and some of the underlying assumptions. Zero Hedge has discussed this issue extensively in the past, yet neither the SEC nor the NYSE (essentially, FINRA) seem to have ever addressed any of the NASDAQ's concerns. Zero Hedge believes the time has come for the later two regulatory organizations to provide some feedback to NASDAQ's concerns.
To summarize the concerns highlighted previously, as part of the NYSE's public solicitation for comments when launching the SLP program, only the NASDAQ provided its perspectives on this program. Keep in mind, one would have to be a very aggressive anti-conspiratorial vigilante to accuse the NASDAQ of being an enterprise which sees patterns where others don't (or assume impossible).
The key objections from the Nasdaq are presented below, and the entire paper is provided for our readers' convenience (highlights and italics added).
New York Stock Exchange: "We Screwed Up"
The story of Goldman's missing PT data has now entered the twilight zone. Matt Goldstein at Reuters reports that Goldman spokesman Michael Duvally notified him that Goldman did in fact not only perform its usual NYSE SLP domination, but also reported of this, as it does every week:
“According to the data Goldman Sachs submitted, we are certain we were among the
top firms in terms of program trading volume for the week ending June 26.”
And guess who is taking the blame: our old friend Ray Pellecchia over at the NYSE:
“Due to an error on our part, the program trading report needs to be revised and we will have a revised list out later this week. It was a system error on our part.”
Ray... just what system does the NYSE use that mysteriously drops the top Program Trading participant: is there a [if shares traded > 1 billion; AND; NYSE vows to Zero Hedge infinite transparency, do "Report 0"] line somewhere in that particular system? Our debugging skills are a little rusty but we would be happy to go through the code line by line and find all other comparable possible systemic errors. In fact, we would make it a crowdsourced event and allow all our readers to participate in that endeavor. Imagine just how bug free the NYSE system would be as a result of this voluntary venture. Of course, this would also prevent such dramas as 15 extra minutes of trading tacked on during the lowest volume day of the year, due to the NYSE's inability to clear and process this abnormally low trade volume.
U.S. service industries from retailers to homebuilders contracted last month at the slowest pace in nine months, as measures of new orders and employment improved.
The Institute for Supply Management’s index of non- manufacturing businesses, which make up almost 90 percent of the economy, rose to 47 -- higher than forecast -- from 44 in May, according to data from the Tempe, Arizona-based group. Readings less than 50 signal contraction.
More at Link...
Senate turns aside new attempt to scrutinize Fed
WASHINGTON (Reuters) - The U.S. Federal Reserve, facing growing pressure as it tries to heal the ailing economy, dodged a bullet on Monday when the U.S. Senate cast aside a new effort to increase scrutiny of the central bank.
On procedural grounds, the Senate blocked a bid to permit the U.S. comptroller general, who heads the investigative arm of Congress known as the Government Accountability Office, to audit the Federal Reserve system and issue a report.
That software was designed by Goldman Sachs to bleed money from the general public, it used decimals before the general public converted from fractions to decimals. They used bladeserver hardware on a Infiniband (low latency) network, later connected together on a 10Gig E network. The hardware all talked through a pair of central I/O controllers and was function-built for this purpose, it's crap for anything else. Software on each server tracks trades on a set of individual stocks, and a number of servers running in parallel are required to track trades on lots of stocks and beat the general public. So while you're waiting for a certain number to sell, the software predicts this and sells a fraction lower to beat you.
Originally posted by fromunclexcommunicate
We have been reading about how Goldman Sachs has been using high frequency arbitrage trading algorithms to beat the day traders. You just don't stand a chance against that kind of machine in the short term.
This mornings 30 year treasury yield was up to 4.37% so it looks like at least the long term interest rates are starting to rise. The Fed will be auctioning off 11 billion more 30 year bonds Thursday. If yields continue to rise that should put some pressure on the equities markets. The GS arbitrage programs trigger off other investors reactions not future news so the GS computer would not be intuitive enough to dump stock early.
U.S. consumers fall behind on loans at record pace
NEW YORK (Reuters) - Soaring U.S. unemployment and a shrinking economy drove delinquencies on credit card debt and home equity loans to all-time highs in the first quarter as a record number of cash-strapped consumers fell behind on their bills.
Delinquencies on the value of all card debt soared to a record 6.60 percent from 5.52 percent in the fourth quarter as more cardholders relied on plastic to meet day-to-day expenses, the American Bankers Association said.
Late payments on home equity loans rose to 3.52 percent from 3.03 percent, and on home equity lines of credit climbed to 1.89 percent from 1.46 percent.
The United States should be planning for a possible second round of fiscal stimulus to further prop up the economy after the $787 billion rescue package launched in February, an adviser to President Barack Obama said.
"We should be planning on a contingency basis for a second round of stimulus," Laura D'Andrea Tyson, a member of the panel advising President Barack Obama on tackling the economic crisis, said on Tuesday.
Proprietary Trading May Cause October Crash: Investor,
Global stock markets could crash in October, as by then it will be clear that the economic recovery many people pinned their hopes on will not materialize, the stimulus option will no longer be a viable one, and proprietary trading desks will decide to go short, economist and investor Enzio von Pfeil, CEO of EconomicClock.com, told CNBC.
"The economic time has to worsen and so these green shoots will morph into black shoots very badly, culminating probably in an October crash," Pfeil said.
"People will finally accept that the unemployment rates will have to keep rising, that productivity will have to keep falling," he added. That in turn will make earnings expectations "fall through the floor."