Stacy Summary: Actually, it was the US attorney who said it, but as Durbin says “bankers own the place.” Maybe this ‘theft’ is actually just a shock and awe type sales pitch? Or maybe they want to blame someone else for the next leg down? We know via ZeroHedge that Goldman was, afterall, 50% of the program trading market. Though, conveniently, the NYSE issued a new rule last week that makes it impossible for the public (or bloggers) to know who is manipulating markets.
“The bank has raised the possibility that there is a danger that somebody who knew how to use this program could use it to manipulate markets in unfair ways,” Facciponti said, according to a recording of the hearing made public today. “The copy in Germany is still out there, and we at this time do not know who else has access to it.”
Tags: goldman · trading program39 Comments
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You would not normally think of a person like me haveing any security-intelligence connections, but for some reason I do — but not the normal ones you would think of.
No Kiwi or Australian nationals however.
Let it be said that I at least somehow wonder if my 2nd or 3rd order connections may have interest or something to do with this Source Code Row. I would endevor to ask them but that would mean international travel, and I am happy enough to leave well enough alone.
Then again my connections may not have anyhing to do with this row — but this row is so odd and counterintuitve such that my connections involvement is not probablilistically implausible. This is a classic 50/50 probablity that can only be resovled to a 1 or 0 given time and enough evidence — and I lack both.
The answer, if there is one in this case — lies in Vancouver BC — not NYC.
The NIP-WOP Thousand Millions Bond Border thingee did not trigger my radar … but it is a very interesting security-intelligence mystery.
That said, it is a very dull Winter in Wellington and it is raining and there is much wind — when the ‘Mother of all Earthquakes’ hits Wellington nobody knows.
amazing!
Max, there’s more to this…
It’s really easy to steal sourc code – it’s one of those things that most banks find hugely difficult to keep secure because developers need complete access to it.
But what is the cost of this theft… in practice it’s virtually zero. Goldman’s systems are so proprietary you’d pretty-much have to rebuild the entire IT infrastructure of the bank before you you could get the GS realtime trading system working. You’d need a huge team and all the knowledge of that team who have been working with GS’s systems for years.
And let me emphasize that GS IT is completely non-standard, 100% proprietary.
At the very most this former GS developer could use the code for reference in order to build a completely new system. But assuming that this is a realtime trading system (and not a pricing system or financial model) there’s probably better sources for this kind of info (e.g. a library book on realtime trading).
Musingcruising..
It seems Aleynikov got only part of it. If he encrypted it it will be hard to know whether it is real (you can’t tell anything from an encrypted file). If the key is lost its only a very persistent person that can crack it.
As a student of machine learning I actually looked into trading algorithms for a major bank, traveling around the US in 1994. I find it hard to believe it would be one executable, not so easy to reverse engineer. The sources may be preprocessed. Without the source feed, what do you do with the code..
Another question may be what is the marginal advantage if you know what GS will do? Being a dodo frontrunning an elephant..
Also in uncertain markets there is no method that can perform predicably. So it may not be deep analysis, just rules.
Then perhaps they only make the racket to keep alive the myth of ingenuity. Its a ‘stir when the trades go stolid’ algorithm. After finding he has no clothes, we may find the emperor simply doesn’t exist..
Here someone claimed to have found it..rather disappointing..
#include
int main( int argc, const char* argv[] )
{
pump();
dump();
}
the code was written in COBOL and not C as reported.
@Mother Earth – thanks again for all your useful information! I love the GS code . . . awesome
There’s got to be a different name for these things aka “markets”.
Why should anything except our pure collective madness be able to manipulate it?
It appears we’ve gone several orders of magnitude too far as far as this sophistication stuff is concerned.
We need druids in the markets, not physicists.
@Salim – - very interesting; what do you think GS are up to then? Why are the FBI involved? Why was there a $750k bail?
Reuters report on it. Why did he wave his rights??
http://www.youtube.com/watch?v=8CVYndkyb7I
please post some links to vids of scandalous nitwtis I can play when we tape ON THE EDGE tomorrow.
thanks
No
Do your Donkey work Keiser!
Mike
You promised me “TFOB” & besides Stacy, i don’t see ANYTHING .
Mike
Biden ADMITS We ‘Misread the Economy’
http://www.youtube.com/watch?v=gTOJi2mF71k
_________________________________________
just for fun:
Obama freaks out over economy! – (Hitler bunker parody)
http://www.youtube.com/watch?v=1qumRW0B9As
Well, well, well
Here come the price controls!
http://www.bloomberg.com/apps/news?pid=20601087&sid=aQkKJvVJLVP4
Mike
for fun:
Obama freaks out over economy! – (Hitler bunker parody)
http://www.youtube.com/watch?v=1qumRW0B9As
and
Vice President Biden: “We Misread How Bad The Economy Was”
http://www.youtube.com/watch?v=7-nMe5Z4q1s
Maybe they’re worried because the code contains something particularly malicious, such as the ability to sniff out data from people’s trade screens as they enter each keystroke. Maybe it uses backdoors provided by MicroSoft to “borrow” processing power from unprotected PCs across the globe. Maybe they want to blame a future incident on terrorists. An incident that will serve to justify the rumored bank holiday.
Who wants to lay in front of a bulldozer for a world of strangers who are financing Bulldozers That Squish People Inc? We need a workable model that laypeople can understand and participate in to localize economies. Not more vagaries about someone having to do something. We need an alternate vision and a vehicle for implementing the systems that go with it. Preferably one without religious, partisan, or make the founder rich beyond belief limitations. Oh yeah, and we’re out of chips n dip in the lobby.
Cook Islands; Recession Fee Oasis Blog http://ow.ly/8Y13
Ex-Goldman programmer out on bail in theft case http://tinyurl.com/mgt2o4
Goldman Sachs Trading Source Code In the Wild? http://tinyurl.com/ql5dq3
Two disturbing stories out of Obama White House as it relates to poor Americans.
“His (Rahm Emmanuel) comments came as the Senate Finance Committee pushed for a bipartisan deal. To help pay for the package, the committee planned to announce an agreement Wednesday with hospitals and the White House for $155 billion over a decade in reductions to Medicare and charity-care payments for hospitals, according to a person familiar with the agreement. That will help pay for the legislation, expected to cost at least $1 trillion over 10 years.”
http://online.wsj.com/article/SB124692407982802911.html#mod=rss_Politics_And_Policy
How can the government cut medicare without a public option on the table?
“It is more important that health-care legislation inject stiff competition among insurance plans than it is for Congress to create a pure government-run option, White House Chief of Staff Rahm Emanuel said Monday.”
This looks like a way to cut future entitlements at the expense of the poor!
There would be two systems: one for those who have the ability to pay, and one for those who don’t. (Not that there isn’t huge disparity now…)
Second disturbing development (actually this was planned):
“The $100 billion education stimulus package gives Education Secretary Arne Duncan unprecedented leverage to energize the languishing school reform effort.
Mr. Duncan confronted this issue directly at a charter school alliance meeting held in Washington last month, pointing out that the states needed to do a much better oversight job and that failing charters needed to be swiftly shut down. High-quality charter models like the ones used by the KIPP program have a role to play in the plan, the goal of which is to change the cultures of chronically failing schools. Charter operators could be brought into some schools, but other schools might need to simply force out the current staff and bring in a new one. In other cases, states will need to shut down chronically failing schools and enroll students elsewhere.”
KIPP is Bill Gate’s new financial love child. The program makes a mockery of reform: it is the impetus behind Bush’s No child left behind legislation…to set up a nationwide system of public charter schools and close the local schools in poor neighborhoods. This happened in New Orleans after Katrina.
Obama said he wants to close 5000 schools and replace the staff. (The rest of the schools would have to tow the line to Fed regulation or pay the same price as new state laws tie the police power to AYP (annual yearly progress) and not federal Title 1 funding.
NYSE error, alleged Goldman breach said unrelated http://r.reuters.com/bub48c
@ snoop diddy…………Obama freaks out over economy! – (Hitler bunker parody)
Brilliant!
Xinjiang riot toll at 156 as unrest spreads http://tinyurl.com/ntfukc
Goldman Sach exec’s making some important decisions:
http://www.youtube.com/watch?v=D2_8wkDeb60&feature=fvsr
Max & Stacy
You guys want to see this:
http://www.youtube.com/watch?v=vlRIF6deHzk
Treasury yield curve mambo. Great vid!
Thanks Stacy and Max for all your hard work in informing we Americans about what is really going on in the world. So much of this news is disturbing but has to be known so that we can take action.
Wow. It is amazing that GS is admitting they’ve written software to manipulate the markets and cheat other market participants. This would be like Don Corleone filing a complaint saying that another mobster has stolen his corner on the prostitution and drug trade in New York.
My question is: is this corporate espionage (as is being portrayed) or national espionage. If Russia knows that the market is controlled by GS’ software, they may want to get some of that software (in spite of the challenge of reverse engineering). Is it just a coincidence that last week we saw the CIA recruiting bankers? Perhaps the KGB is one or two years ahead of them?
Max, could you consider getting Kevin Mitnick On The Edge to comment on this?
http://en.wikipedia.org/wiki/Kevin_Mitnick
(ps. it looks like there is another Chris posting to this board; perhaps we should distinguish ourselves!)
U.S. should plan 2nd fiscal stimulus: economic adviser http://tinyurl.com/km92mm
Goldman Says Morgan Is All Wrong About Fed’s Quantitative Exit http://tinyurl.com/ks39mf
No big deal, program trading is only HALF of the NYSE volume 6/22-6/26
http://www.nyse.com/pdfs/PT06.22-06.26.pdf
You guys saw this right? I wonder why Goldman isn’t on that list.
@Photoception
,but what was shocking was the disappearance of the #1 mainstay of complete trading domination (i.e., Goldman Sachs) from not just the aforementioned #1 spot, but the entire complete list. In other words: Goldman went from 1st to N/A in one week.
FROM: Is a Case of Quant Trading Sabotage About to Destroy Goldman Sachs? http://tinyurl.com/rxpp5c
Stacy says: “what do you think GS are up to then? Why are the FBI involved?”
A number of theories presented by others here.
1. It could be a case that this code contains something embarrasing – e.g. ugly hacks.
2. Create the illusion of novelty by making a fuss over something which was stolen even though it is worthless outside of it’s intended context.
3. Revenge – perhaps this guy went to work for a rival bank?
4. Automated laywering – perhaps the senior management do not care… just let the lawyers & security people do what they do.
The knowledge a VP takes with him is usually far more valuable than the actual code. From what I can tell there’s no actual proof that the code was “stolen” with the intent to re-distribute. It might have been copied for personal reference. Even though that’s illegal it’s common practice amongst developers to take a personal archive of any work.
Interestingly I met a bunch of former GS people who went to work for JPM. Their brief was to re-produce the GS systems but using the latest software technology. GS software is built using SLANG which is a programming language dedicated to high-performance finance. It’s also 20 years out of date.
Unfortunately GS have such a huge legacy of SLANG code they cannot escape it. No other bank would ever want to copy their stuff… it’s just too awful for words!
@salim – so you reckon there was no value in this? how about to the russians as I saw someone mention? Though that seems highly unlikely.
There is also this: http://www.zerohedge.com/article/citadel-trail-emerges-goldman-injunction-follow-shortly
With the help of the federal govt and FBI, GS has managed to wipe out some competition . . .
Here’s a music copyright story for you, Stacy & Max. A 32 year old woman in Brainerd, Minnesota, is ordered to pay $1.92 million/$80k per song to recording companies, a federal jury decided. http://www.startribune.com/entertainment/50089877.html?elr=KArksLckD8EQDUoaEyqyP4O:DW3ckUiD3aPc:_Yyc:aUUX
General of all American Intelligence: 911 was a fraud!
http://www.youtube.com/watch?v=daNr_TrBw6E
Just another video for you to watch?
Business Came First’ for ABN Amro Banker Found Dead
http://www.bloomberg.com/apps/news?pid=20601109&sid=aqYxg0DptluE
Why does GS need supermath programs when it can just frontrun everything the Fed does?
Is this the SLANG that we are talking about?
http://www.swd.de/products/datasheets/slang_en.html
If so it looks like it needs to run on the QNX OS.
The QNX OS may be older but it is a very robust and fast OS.
It is used for many time and safety critical applications.
Microsoft OSes are American.
Mac OS is American, and its BSD core has a long history in America. BSD’s codebase in the purest since has never left the US.
QNX is not in this lot.
QNX is a Canadian operating system that is
– REALTIME
– MICROKERNAL
– RESILIENT
– Significantly open source, but not Kernel or “Core Drivers”
and a rare one at that.
Technically QNX has been partially superseded by the open Minix 3 — based on the educational open source QNX 1 & 2.
Minix 3 is written by an American, but snippets of Minix 1 became the basis for Linux.
I view it a good idea to have QNX and Minix 3 competing against each other — it keeps these real time OSes honest.
For some reason a lot of spacecraft use VXworks…
@gordo
No, the GS SLANG is 100% proprietary to GS – nobody outside of GS uses it. You cannot buy text-books for Slang. You cannot buy SLANG anywhere.
The knowledge of how to use SLANG is passed down by word-of-mouth in a bizarre tribal ritual.
@stacyherbert
“With the help of the federal govt and FBI, GS has managed to wipe out some competition . . .”
This sounds more plausible right? You turn a harmless code-theft without intent to distribute into an international scandal with you as the victim. Meanwhile you get to shut-down your rival and impose harsh conditions before they are allowed to trade in the USA.
Who wins in this circumstance?