Judge Junks Most Evidence Against Alleged Software Thief

Jun 23 2014 | 9:33am ET

Sergey Aleynikov’s five-year legal odyssey never should have begun, a judge has ruled, increasing the likelihood that the former Goldman Sachs computer programmer will be acquitted at his second trial for allegedly stealing the bank’s high-frequency trading code.

Aleynikov was arrested in 2009 His home was searched and a number of computers and other equipment seized.

But New York State Judge Ronald Zweibel said that the arrest was “illegal” and that the Federal Bureau of Investigation “did not have probable cause to arrest the defendant, let alone search him or his home.” As a result, Zweibel suppressed much of the evidence prosecutors planned to use against Aleynikov, including his first statements to the FBI, given before he was read his rights. Those are “the fruit of the poisonous tree” of the “illegal arrest,” Zweibel said. Later statements will be allowed into the trial, due to Aleynikov’s waiving of his right to counsel.

Aleynikov, who allegedly planned to deliver Goldman’s software to Teza Technologies, a controversial HFT firm founded by several former Citadel Investment Group traders that has not been accused of wrongdoing in the case, still must face the criminal charges, under which he faces four years in prison. Zweibel last May rejected his bid for a dismissal.

It will be Aleynikov’s second time before a jury: He was convicted in federal court of similar charges in 2010 and spent more than a year in prison before a federal appeals court threw out the guilty verdict. Zweibel said that Aleynikov’s computers should have been returned to him after that reversal, rather than handed over to the Manhattan District Attorney’s office.

“Justice Zweibel’s decision represents a damning indictment” of the case against Aleynikov, his lawyer, Kevin Marino, said. “We are confident that today’s decision is another important step on Sergey Aleynikov’s long journey to complete vindication.”


In Depth

Whisky Business: The Ultimate Liquid Alternative Investment

Sep 15 2014 | 7:02am ET

David Robertson knows his single-malt whisky—he was the Master Distiller at the...

Lifestyle

Hedgies Rock Out For Children's Charity

Sep 15 2014 | 8:40am ET

It's that time of year again—when hedgies trade in their spreadsheets for guitars...

Guest Contributor

Volkered: How Financial Sector Reforms are Creating Opportunities for Hedge Funds

Sep 16 2014 | 11:28am ET

New regulations have dramatically curtailed proprietary trading activity in investment...

 

Editor's Note

    Get A Sneak Peak Of The Alpha Pages

    Aug 25 2014 | 11:21am ET

    As many of you know, FINalternatives was recently acquired by the owners of Futures magazine, a firm called The Alpha Pages LLC. Today marks the soft-launch of a new sister site for both publications. As its name suggests, The Alpha Pages will cover all types of alternative investments, going far beyond the more well-known ones such as hedge funds and private equity. Read more…

 

Futures Magazine

September 2014 Cover

The London Whale: Rogue risk management

Credit default swaps brought down the London Whale and cost JPMorgan $6.2 billion. Here is how it happened.

The Alpha Pages

TAP July/August 2014 Cover

The Alpha Pages Interview: Senator Rand Paul

Senator Paul sat down in the debut series of the Alpha Pages Interview to discuss the broken tax code, regulation surrounding Bitcoin, and his plans for the 2016 Presidential election.