Teza Chief Says He Didn't Want Goldman Code

Dec 7 2010 | 1:06am ET

As the trial of one of his former employees enters its second week, former Citadel Investment Group high-frequency trading head Mikhail Malyshev said that he never asked Sergey Aleynikov to steal proprietary software from Goldman Sachs.

Aleynikov is accused of doing just that, copying vast portions of Goldman's high-frequency trading code in the days before he left the firm to join Malyshev's Teza Technologies. But even if Aleynikov had stolen the code to impress his new bosses, Malyshev said it wouldn't have worked.

"I don't think they're good at it," he told The Wall Street Journal.

Malyshev said that Teza has strict rules about employees bringing code from former employers, and that such activities are barred by their employment agreements. Still, during Citadel's successful battle for an injunction against Teza—the hedge fund giant accused Malyshev and Jace Kohlmeier, another former employee and co-founder of Teza, of violating their non-compete agreements—Malyshev admitted that Aleynikov had uploaded third-party software onto its computers.

He said, however, that "we know it's not" the Goldman code at the heart of the Aleynikov case.

Malyshev also took the opportunity to take a few potshots at Aleynikov, who was fired after his arrest last year. While Malyshev said Teza "percieved him as a very talented candidate," he said the 40-year-old showed a lack of maturity in disputes over his pay, vacation time and Teza's desire for him to work in New York rather than New Jersey.

"Honestly, I probably didn't do a good job negotiating," Malyshev said.

Meanwhile, the judge presiding over Aleynikov's trial sealed the courtroom for the second time during the case. U.S. District Judge Denise Code did so during the testimony of Konstantin Shakhnovich, a Goldman managing director, to protect Goldman's trade secrets.

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