Replies

Why Does Everyone Keep Picking On Us?

This blog entry references a Bloomberg story I can’t link to about Sergey Aleynikov, 39, the former Goldman computer programmer who was arrested on theft charges July 3, 2009.

2 interesting comments to this blog entry:

#29
July 10th, 2009 at 7:09 am Reply to this comment

Robert Sneddon

Goldman Sachs runs the computerised “post office” for the new York Stock Exchange, controlling the servers and routers on which they can run their own programs if they so wish. They have absolute access to all the data that flows between traders including the computer-mediated bids and trade executions.

They can examine all this financial data, if they care to look—it’s not encrypted, believe it or not, just plain text—and jump in a few milliseconds before a legitimate trade is executed to buy or sell themselves, or delay a given trade by a few tens of milliseconds (network latency can be tuned by the operators) to give their sniper-programs a chance to get a shot in somewhere else. It’s automated insider-trading, if you like.

Whether they were actually doing this is another matter, but in the Bad Times at the end of last year the financial returns of such an operation could well have meant the difference between survival and collapse for Goldman Sachs.

The big question is can the US Government afford to investigate this rigorously? The possible loss of confidence in NYSE’s core legitimacy as a level playing field for investors is potentially devastating.

...............................
#30
July 10th, 2009 at 7:20 am Reply to this comment

The Grand Panjandrum

Front running is not illegal but when you clients find out you’ve been doing it to them, they can get irritated. Look for large institutional investor clients of GS to start asking questions. Zero hedge has this clip of Weil talking about his article in Bloomberg. Well worth the time to watch it.

As all these pieces come together you can see why Taibbi’s RS piece is so important and should be read by anyone who gives a shit about this country’s financial markets.

http://www.balloon-juice.com/?p=23850