Breakfast Links: Goldman trading scandal edition

July 6, 2009

Kudos to my colleague Matt Goldstein, who broke a big story on an emerging scandal at Goldman Sachs while the rest of us were enjoying a three day weekend.  Forthwith, a digest of primary docs and blogosphere discussion since Matt broke the story.

A Goldman Trading Scandal (Reuters)  This is Matt’s story.  In a nutshell, federal authorities allege that former Goldman employee Sergey Aleynikov stole software he wrote that drives the company’s proprietary trading engines, the black box as it were.  Aleynikov got a better gig in Chicago, announced his resignation, and, in his last week at Goldman, decided to take the black box with him.  It all seems pretty foolish.  Of course Goldman had him sign a standard non-disclosure agreement when he was hired, which means any software he wrote while at Goldman was Goldman’s property.

Aleynikov Complaint (Reuters)  Here’s a pdf of the FBI affidavit that spells out the charges against Aleynikov.  It’s clear Goldman knew about his allegedly illegal downloads a couple weeks before they moved to arrest him.  At the start of a holiday weekend, when it is particularly hard to make bail and you’re likely to spend the whole weekend in the slammer.

Aleynikov’s LinkedIn profile (LinkedIn)  Details about the alleged perp.

The plot thickens….

NYSE Program Trading update, 6-22 (NYSE)  For months Goldman has been atop the list of program trading at the NYSE.  Then suddenly the week of 6-22, Goldman disappears from the list.  They didn’t just fall to fifth or sixth place.  They disappeared.  Is that because their trading programs were compromised by Aleynikov?  Inquiring minds want to know.

Is a Case of Quant Trading Sabotage about to Destroy Goldman Sachs? (Zero Hedge)  More than anyone else, Tyler has been all over Goldman for monopolizing program trading at the NYSE.  He thinks that Goldman’s sudden disappearance from the weekly table has everything to do with Aleynikov’s arrest.  Folks interested in Tyler’s detailed thoughts on the topic should consider going through all his posts labeled program trading.

Additional Links…..

The Great Goldman Black Box Heist (Alphaville)  Some quick analysis from the complain about how Aleynikov was caught.

FBI Arrest may open Goldman’s black box (Daily Kos)  More helpful analysis of the news from bobswern.

Oh, by the way, Aleynikov and his wife appear to be competitive ballroom dancers.  Check ’em out….


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Decimal Place Trading caused the recession of 2008
This recession was caused by the manipulation of stock prices on Wall Street through naked short-selling, flash trading, high-frequency trading, secret software, super-fast computers and what I feel was the main cause of this corruption: “Decimal Place Trading.” As I write this article today, much of this corruption is now slowly coming out through social media outlets such as Twitter and Facebook, along with bloggers on the internet, Yahoo bulletin boards, and the movie Stock Shock. The news media is also to blame for what has taken place in this country — including the near-collapse of Wall Street and the banking industry.
There are many things to point fingers at or place the blame on, and I can think of a few off-hand that I would like to cover — the first being Wall Street’s regulation changes. I am no expert — I am not even a writer — but decided to tell this story since the business news media was not telling it. These Wall Street regulation changes contributed to the aforementioned problems in many ways, with the first being the removal of fractions in stock pricing. On January 29, 2001, the New York Stock Exchange, or NYSE, went to four-decimal-place trading. On March 12, 2001, the National Association of Securities Dealers Automated Quotation, or NASDAQ, followed suit. This new rule had the best of intentions as we headed toward the computer and digital world, but over time it was manipulated and companies like Goldman Sachs figured out how to take advantage of the new system. I am not sure how it happened, whether it was lobbied for years or what — but along came the biggest mistake of all with the elimination of the uptick rule in July of 2007. This rule had been implemented after the great depression, and had been in place since 1938. How could the Securities and Exchange Commission, or SEC, abolish a rule that had been in place for close to 70 years, and had worked? Put these two changes together, and you get a simple equation: greed plus corruption equals recession.
Reports have been released on the web that Goldman Sachs made over 100 million dollars per day in 46 out of 64 trading days in Fiscal Year 2009, second quarter (April, May and June). Let me say that again. They made over 100 million dollars per day, and are still doing it as I write this letter today. But the question remains, how did they do it? There has been no report of this by any of the news media. How can this be? This corruption is 100 times the gravity of the Bernie Madoff story, and yet there has been no coverage by CNBC or Bloomberg News. Why? Goldman Sachs, upon Wall Street transitioning to fractions and the abolishment of the uptick rule, designed secret software and used this software to gain an advantage on every potential investor. Basically, Goldman Sachs became a Las Vegas poker dealer in New York City on Wall Street, turning profits on investors every trade with their super-fast computers and software.
Richard Keane August 26th, 2009 Revised version

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White house calls me Wall Street crime about to be exposed

Richard Keane, narrator Stock Shock



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Here is a press release that came out today Sept 2nd, 2009. It also has a few photos on it and a 12 second video of me.

please check out the link lease/white-house-curious-about-movie-st ock-shock-114735.php

Richard Keane, narrator Stock Shock

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