Goldman Sachs - "Somebody who knew how to use this program could use it to manipulate markets..."

Market manipulation software out in the wild. Joy.

www.bloomberg.com...

Goldman Sachs Loses Grip on Its Doomsday Machine: Jonathan Weil

...Aleynikov, 39, is the former Goldman computer programmer who was arrested on theft charges July 3 as he stepped off a flight at Liberty International Airport in Newark, New Jersey. That was two days after Goldman told the government he had stolen its secret, rapid-fire, stock- and commodities-trading software in early June during his last week as a Goldman employee. Prosecutors say Aleynikov uploaded the program code to an unidentified Web site server in Germany.

It wasn’t just Goldman that faced imminent harm if Aleynikov were to be released, Assistant U.S. Attorney Joseph Facciponti told a federal magistrate judge at his July 4 bail hearing in New York. The 34-year-old prosecutor also dropped this bombshell: “The bank has raised the possibility that there is a danger that somebody who knew how to use this program could use it to manipulate markets in unfair ways.”

How could somebody do this? The precise answer isn’t obvious -- we’re talking about a black-box trading system here. And Facciponti didn’t elaborate. You don’t need a Goldman Sachs doomsday machine to manipulate markets, of course. A false rumor expertly planted using an ordinary telephone often will do just fine. In any event, the judge rejected Facciponti’s argument that Aleynikov posed a danger to the community, and ruled he could go free on $750,000 bail. He was released July 6.

Market Manipulation

All this leaves us to wonder: Did Goldman really tell the government its high-speed, high-volume, algorithmic-trading program can be used to manipulate markets in unfair ways, as Facciponti said? And shouldn’t Goldman’s bosses be worried this revelation may cause lots of people to start hypothesizing aloud about whether Goldman itself might misuse this program?

...while most Americans were enjoying the Fourth of July holiday, Facciponti was in court warning of looming threats to Goldman and the financial markets.

“The copy in Germany is still out there,” the prosecutor said, according to an audio recording of the hearing. “And we at this time do not know who else has access to it and what’s going to happen to that software.”
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...remaining article at link

[edit on 9-7-2009 by Dbriefed]

[edit on 9-7-2009 by Dbriefed]

It wouldn't be hard to figure out how to use the system. Especially if they have the source code. I would imagine anybody with an advanced knowledge of the markets could figure it out in the time that it has been in the wild.

Interesting none the less.

Uhhh durrrrrrrrrrrrrrrrrrrrrrrrr! (my way of saying this was obvious).

I'm just not at all surprised by this, nor do I think for a single minute that GS didn't use this program to manipulate the market itself. That was the whole point behind the program, from what I understand, and these programs were designed from inception to screw people out of money.

Back in 1995, over 25% of all ivy league school recruiters were from JP Morgan, Goldman Sachs, Morgan Stanly, AIG, etc, and they were looking for "hotshot mathematicians and physicists" who didn't need to know anything about business, they just had to be able to devise complicated schemes to rob people of their money through the open market by "shifting billions of dollars around by the microsecond to undermine foreign currencies" and god knows what else.

Edit to add: By the way, Goldman Sachs stock is up over 300% since November 08.

[edit on 9-7-2009 by Kaytagg]

Goldman Sachs is evil man.

They need to be taken down and dismantled.

reply to post by Hastobemoretolife


I don't think you get it Hastobemoretolife...

With this program, running essentially on the NYSE network they could see transactions before they were posted on the exchange.

Basically it would be like knowing the dealers cards, before the dealer dealt them and what to bet. Electronic trading knowing bid/ask before it's posted on the exchange for all others to see = billions in profit.

It gets worse. For this to happen it would be allowed to sniff traffic transversing the NYSE. Modern routers have this function disabled by default. That means there was either 2 possibilities here

1.) GS actively was hacking the NYSE network to receive packets with desired information.
2.) The NYSE enabled promiscuous mode on that port specifically for the GS program to intercept and trade on. That's collusion.

The illegality of both is extreme. You can't front-run trades. Both should be considered a form of economic treason if true. That is how serious this is. Daily KOS reported they were earning 100 million per day on their electronic trading.

They posted a record profit for a reason, and this could very well be it. Unfortunately this will vanish under the interest of National Security. It really shouldn't.

Should this prove true, and what I stated above is brought into public, it is a nuclear bomb on our markets that we will NEVER recover from.

Who's going to complain? Nobody. That's part of the scam - you get everybody's pension and 401K tied up in the market and mom and pa and grandpa don't want to see it crash or risk challenging anything that will MAKE it crash.

It's a beautiful system, really.