Sergey and Misha

July 7, 2009

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.

In addition, Malyshev and his partners also have formed a company called Teza Group.

Right now there’s no indication that Malyshev and his partners had any knowledge of what Aleynikov was doing. But we’ll stay on the case.

Update: Finally got a copy of the Teza statement on Sergey. Here’s a particularly relevant snippet:

In connection with his hiring, Mr. Aleynikov was subjected to and passed a standard pre-employment background check and represented and agreed that he was not and would not be in violaton of any obligations to third parties, including that he had not and would not violate anyone’s intellectual property rights.


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Why didn’t Bloomberg mention that Reuters/Goldstein broke this news yesterday in their first report. Even CNBC had this reporter on air yesterday so the market knows he was first to the story. What do they think if they source it then it has to be true and no other news publication has quality sourcing/reporting?

The Reuters reporter didn’t just find/read an FBI charge and report the news – he had to dig and fact check that it was Goldman Sergey worked for and stole codes from – on a holiday weekend – and beat every major financial news writer to the story. It looks like Bloomberg on the other had just had to show up in court and hear that Teza Tech was the firm.
At least this Reuters writer choose to give Bloomberg credit when it advanced the story by naming the Chicago firm.

Posted by nyc trader | Report as abusive

[...] der Chicagoer Firma soll es sich laut dem Reuters Blog um Teza Technologies LLC handeln, eine noch äußerst unbekannte Firma die erst neulich im Mai von [...]

very informative, enjoyed the article

I’m annoyed by the computer illiteracy of most of these articles.

Sergey was not a code-cracker, code breaker, or smuggler of secret codes.

The code in question was computer programming code, and is never plural. Sergey was probably the author of most of it, judging by the frequency of his postings on the erlang-questions list. He uploaded some of it to rapidshare or some site like it so he could work on it at home.

Malyshev wanted some of the skills that Sergey brought to GS at his startup, so he was willing to pay. Those skills must have been amazing in order for GS to make such a big deal over such a small thing.

Posted by Jamaal | Report as abusive

agree with Jamaal. all this hype is overblown and computer illiterate, and shame on Goldman and Citadel. Goldman only now figured out that someone downloaded some code month(s) ago? Yet if they say Aleynikov can manipulate markets then what stops Goldman to manipulate markets?! Feds should be all over Goldman for these kind of “scares”. This chaos around Teza makes me think that the guys setting up Teza are the “movers and shakers” in the fin tech market and competitors just scared to death about what they might have to compete against.

Posted by Drew | Report as abusive