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Former Goldman Sachs programmer Sergey Aleynikov was sentenced in Manhattan federal court on March 18, 2011, to 97 months in prison—about eight years—after a jury convicted him of stealing trade secrets and transporting stolen property across state lines. The case centered on proprietary source code used in Goldman’s high-frequency-trading operation.
What code did Sergey Aleynikov take?
Aleynikov worked at Goldman Sachs from May 2007 to June 2009, developing programs that supported high-frequency trading in commodities and equities. The material at issue was source code for Goldman’s proprietary trading system. The U.S. Department of Justice said the firm had acquired the underlying system in 1999 for approximately $500 million, then modified and maintained it. The department also said the system generated millions of dollars per year in profits for Goldman. DOJ sentencing announcement
A contemporary SecurityWeek account described the prosecution evidence as involving 500,000 lines of source code. That figure is SecurityWeek’s description; the DOJ’s $500 million figure refers to the system’s 1999 acquisition, not a valuation of the stolen files. SecurityWeek report
How did the transfer happen?
Aleynikov accepted a job at Teza Technologies, a newly formed Chicago trading firm, and resigned from Goldman in April 2009. On his final Goldman workday, June 5, he transferred substantial portions of the trading code to an external computer server in Germany, encrypted the files, and deleted the encryption program and shell-command history, according to DOJ and FBI records. Those records also describe thousands of code files transferred to home computers and a laptop and external storage device containing Goldman code that he later brought to Teza meetings. DOJ sentencing announcement FBI account
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He was arrested on July 3, 2009, after returning to Newark Airport from a visit to Teza in Chicago. FBI account
What were the charges and sentence?
A Manhattan federal jury found Aleynikov guilty on December 10, 2010, of theft of trade secrets and interstate transportation of stolen property. On March 18, 2011, Judge Denise L. Cote sentenced him to 97 months in federal prison, followed by three years of supervised release, and imposed a $12,500 fine. DOJ sentencing announcement
U.S. Attorney Preet Bharara said the sentence was intended to signal that professionals who abuse workplace trust to take confidential business information would be prosecuted and punished. At sentencing, Judge Cote described the theft’s scope as audacious and characterized it as disloyalty to Aleynikov’s employer. DOJ sentencing announcement SecurityWeek report
Independent reader supportYour contribution helps us test, update, and keep practical guides available for everyone.What the case shows about protecting company code
For businesses, the case illustrates why confidentiality agreements alone are not a complete safeguard for valuable source code. Goldman’s system was protected through confidentiality agreements and other measures, according to the DOJ. The alleged transfer route also points to practical controls firms may need to consider: limiting access to sensitive repositories, monitoring transfers to external servers and personal devices, and tracking removable storage. DOJ sentencing announcement FBI account
The conviction and sentence described here are the 2010–2011 federal proceedings. The cited accounts do not establish the complete later appellate or state-court history, so they should not be read as a full account of every subsequent legal development.
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