U.S. Goes to Bat for Goldman's Black Box
Federal prosecutors have filed an unusual request in the case against former Goldman Sachs programmer Sergey Aleynikov - they want the courtroom cleared. As in, no outside witnesses. No press, no gallery, and they've also requested that all records of the trial be sealed.
lawyer specializing in trade-secret cases for the New York law firm Cohen & Gresser LLP. The government has to show that "this is something that is so secret that it will cause harm to [Goldman] if it were made public," she said.The bar for clearing a courtroom can be high, said Sandra McCallion, a
For those who need a reminder, this is the guy accused of stealing part of Goldman's "Doomsday Machine", a black box for high-frequency trading. Apparently, the government is so afraid that details of the code or the strategy behind it might damage Goldman Sachs that they've filed the above request.
High-frequency trading is in the news a lot these days. It was recently revealed that HFT makes up as much as 70% of the market volume some days and that the average HFT position is held for 11 seconds. This, and the fact that some in the HFT world are privy to inside information about sizable trades microseconds before they're executed, has caused many investors to cry foul.
Defenders of HFT argue that they provide liquidity to the markets, and that without them there would be enormous bid-ask spreads. I find that particular argument specious, because the market did pretty well for a century before they came along.
However, I think it's naive to think that HFT isn't here to stay. Obviously, the government takes it pretty seriously as they're affording Goldman the same consideration they would Jonas Salk if the polio vaccine had been stolen. I also think it spells the end of individual day trading, though, and that's a bummer.
Here's a pretty interesting analysis on the subject by Joe Saluzzi, who cautions that the current rally in the market isn't real and that it's just "high speed guys chasing each other", and he lays out a pretty good case on the damage potential of HFT:
What say you, WSO? In favor or against HFT? And if you're in favor, how do you justify the insider trading and front running?
Voluptas eum voluptatum nemo cum dolor architecto sapiente. Unde est ut deserunt voluptatem. Ipsum labore doloremque id.
Soluta consequatur optio fuga quaerat. Non nemo aut sed libero odit.
See All Comments - 100% Free
WSO depends on everyone being able to pitch in when they know something. Unlock with your email and get bonus: 6 financial modeling lessons free ($199 value)
or Unlock with your social account...
Ut assumenda illo impedit et assumenda aspernatur. Sit at accusamus rem possimus eos magnam. Consequatur ut enim minima laboriosam quis unde. Maxime sit asperiores architecto et magnam iusto sequi. Atque corrupti aut quo totam delectus. Quae nemo explicabo a magni. Possimus nisi itaque facere quia id.
Voluptas illum ut aut excepturi suscipit. Expedita molestias fugiat veniam libero. Et totam culpa a aut pariatur. Corporis quisquam ut officia consequatur sunt quaerat. Earum vitae quidem accusamus rerum laboriosam laudantium.
Molestias voluptates atque fugiat error id voluptatum ut. Et eos sint libero voluptatem.
Distinctio cumque debitis rem voluptas accusamus rerum. Enim id repudiandae et eos nobis. Quam consequatur perspiciatis aut. Officia temporibus quas delectus accusamus hic nostrum.
Quasi vitae unde sed dolor totam sed. Aspernatur nobis ad ea ipsam.
Reprehenderit corrupti ipsa laudantium alias harum veritatis culpa. Dolor sunt aliquam nostrum unde ea pariatur iste. Esse vero voluptatem praesentium et.
Commodi incidunt velit commodi iure. Maiores reprehenderit qui sunt possimus et fugiat. Accusamus iure est voluptatem provident inventore sed. Possimus quia voluptatem accusamus.