Ex-Goldmans employee 'stole computer secrets'

Some of the secret computer codes at the heart of Goldman Sachs' uber-profitable trading business have been stolen by a former employee, the bank believes. The bank called the police last week and a 39-year-old computer programmer was yesterday in custody, trying to raise a $750,000 bail bond.

As news of the alleged security lapse at Wall Street's most powerful institution was flashed around trading screens, Goldman insiders insisted that its business and its clients had not been harmed.

Lawyers for the former employee, Sergey Aleynikov were refusing to comment on the charges ahead of a 3 August hearing. The Russian-born immigrant living in New Jersey was arrested on Friday as he stepped off a plane at Newark international airport.

Court papers – which do not name the financial institution as Goldman Sachs – accuse Mr Aleynikov of "theft of trade secrets" related to computer codes used in automated stock and commodities trading. "The financial institution has devoted substantial resources to developing and maintaining a computer platform that allows it to engage in sophisticated high-speed and high-volume trades on various stock and commodities markets. Among other things, the platform is capable of quickly obtaining and processing information regarding rapid developments in these markets."

So-called "black box" trading strategies rely on complicated algorithms to select trades and allow users to harvest tiny profits from millions of small trades.

Mr Aleynikov left his $400,000 job at Goldman last month for another firm in Chicago, where he was being paid three times that sum, according to the court papers. Before he left, he allegedly improperly copied proprietary computer code and uploaded it to a server in Germany. He allegedly told investigators that he had intended to collect only "open source" files but "later realised that he had obtained more files than he intended".