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from Commentaries:

Will Sergey cut a deal?

It looks like federal prosecutors may be trying to cut a deal with alleged Goldman Sachs high-frequency trading code stealer Sergey Aleynikov.

Today was the day for prosecutors to indict Aleynikov, who was arrested on July 3 on the theft charges. But in a court filing, prosecutors told the presiding magistrate judge that they need another 14 days to continue discussions with Aleynikov's lawyer about a "possible disposition.''

In the legal world, a "possible disposition'' means a deal.

Now it could be that prosecutors want to get Aleynikov to plead guilty so he can provide evidence against other potential defendants. But I don't think that's the case here.

To date, there's no evidence that Aleynikov shared any of the illegally obtained "source code" with his new employers at Teza Technologies, an upstart high-frequency trading firm founded by former Citadel Investment Group employees.

In fact, prosecutors and Sergey's lawyer have been talking about a possible resolution of the case since July 7--a day after he made bail.

The more likely scenario is that federal prosecutors are anxious to make this case go away. There's been a lot of criticism that the government may have overplayed its hand by making Aleynikov's alleged theft seem like the crime of the century. Some, including myself, have suggested it almost appeared like federal prosecutors were doing the bidding of Goldman.

from Commentaries:

Chez Sergey

Earlier today, my Reuters colleague Steve Eder posted about his journey Sunday to the New Jersey mansion of alleged Goldman Sachs trading code thief Sergey Aleynikov. And what a home it is.

It appears Sergey and his family recently moved into a brand spanking new McMansion in North Caldwell, NJ. As I pointed out last week, North Caldwell just happens to the same town that Tony Soprano was supposed to reside in. And the house Sergey bought isn't much smaller than Tony's.

Guess that means Sergey wasn't planning to relocate to Chicago for his new $1.2 million-a-year job with Teza Technologies.

The Aleynikov abode on Arbor Road is valued at $1.14 million, according to a financial statement Sergey submitted to federal authorities following his July 3 arrest. Other assets Aleynikov listed was a home in Little Falls, NJ he and his wife, Elina, are trying to sell. He listed the market value for that more modest home at $550,000.

Altogether, he reported shelling out $6,000 a month in mortgage payments. With Sergey suspended from this Teza job and Elina not currently working, it won't be long before the North Caldwell house is probably on the market too.

Not surprisingly, Magistrate Judge Kevin N. Fox ruled that Sergey is not entited to court-appointed counsel beyond his initial court appearance.

from Commentaries:

Sergey and Misha

The name of the Chicago firm that hired alleged Goldman code-cracker Sergey Aleynikov is out and it's a name you've probably never heard of before. That's because Teza Technologies LLC is a new firm--formed in May--by former Citadel Investment Group trader Misha Malyshev.

Malyshev, who had been a top high-frequency trader at Citadel, left the giant hedge fund in February because he felt he was not being sufficiently compensated, says a source familiar with the situation. Malyshev's group was one of the more profitable last year for Ken Griffin's operation, which overall had one of its worst years ever in 2008

And here's the thing: I'm told Malyshev signed a nine month non-compete agreement with Citadel when he left.

Bloomberg first reported that Teza hired Aleynikov and got an email statement from the start-up, in which the firm said it "was not aware of the alleged misconduct.''

In the email statement, Teza also said it has suspended Aleynikov without pay and didn't learn of his July 3 arrest until July 5. That, of course, is the day that we at Reuters broke the news that Aleynikov was arrested by federal authorities and charged with stealing the source code for Goldman's rapid-fire stock and commodities trading platform.

Right now, Teza is a small operation at best. There's no website for the firm and it doesn't appear to have a listed phone number. Illinois incorporation records reveal the company was formed on May 5. One of the mailing addresses appears to be the home address for one of the principals, Matthew Hinerfeld, who is an ex-Citadel guy too.

Hinerfeld worked in the counsel's office at Citadel. So is another founder, Jace Kohlmeier, who had the same non-compete agreement with Citadel as Malyshev.