Appeals court frees programmer convicted of stealing employer’s computer code

2nd Circuit limits prosecutors’ use of the Economic Espionage Act of 1996

In December 2010, a federal district court jury in New York convicted former Goldman Sachs computer programmer Sergey Aleynikov of stealing a huge portion of the Wall Street bank’s proprietary, high-frequency trading (HFT) software code to aid his new employer. It sentenced him to eight years in prison. Federal prosecutors heralded the verdict as an example of the government’s crackdown on employees who steal valuable company information in digital form.

But on Feb. 16, in an unusual move, a 2nd Circuit three-judge panel reversed the judgment just hours after oral arguments and ordered the defendant released. On April 11, the 2nd Circuit released its full opinion in U.S. v. Aleynikov.

Narrow Interpretation

Aleynikov stood to increase his salary from $400,000 to $1.2 million by accepting a job offer from Goldman competitor Teza Technologies, which planned to build its own HFT system.

Just before his going-away party at Goldman, Aleynikov encrypted and uploaded to a server in Germany more than 500,000 lines of source code for Goldman’s HFT system. He then downloaded the code to his home computer. Later he took some of the code to a meeting with his new employer. As he returned home, the FBI arrested him at the airport. The FBI searched Teza computers but found no copies of Goldman’s code.

Michael Kozubek

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