Sachs and the state of ‘ unfair ways’
WHAT the hellamI doing here? By “here” I mean inside the Manhattan state courthouse at 111 CentreSt. where JusticeDanielConviser on Wednesday started presiding over District Attorney Cyrus
Vance’s attempt to beat a dead horse — and a live computer programmer — in an effort towin the favor of financial powerhouse Goldman Sachs.
This is what’s wrong with the American judicial system.
This is also what can go wrong whenwealthyWall Street firms have control over our politicians and decide to push them around. The guy on trial is named Sergey
Aleynikov, whohasbeenmentioned prominently in this column many times before. Aleynikov also had a starring role inMichaelLewis’ bestselling book “Flash Boys,” about the highfrequency traders who’ve infestedWall Street in recent years and who control our markets.
Aleynikov, who worked at Goldman, spent a year in prison for taking computer codes that his company was using for highfrequency trading. He was arrested by the FBI on Goldman’s sayso and was tried by Manhattan US Attorney Preet Bharara and convicted.
Much to the embarrassment of the feds and the disgust of Goldman, the verdict was tossed in 2012 by an appeals court.
After 12 months up the river, Aleynikovwas set free.
Anyrational personwouldhave figuredthatwouldbetheendof it— you know, double jeopardy, fairness and all that. Or, at worst, that Bharara would appeal.
But that’s not what happened. Vance, who is an elected official, stepped in and decided to take a whack at Aleynikov, a scrawny computer nerdwho looks like the kind of guywho’dbe pickedonin the schoolyard by a bully like Goldman.
That’s why I was stuck in court on Wednesday listening to opening statements about how Aleynikov “didn’t rely on his own genius” but took what belonged to the financial giant.
Maybe he did. In fact, Aleynikov doesn’t disagree that he took computer codes. His lawyer argued that whatever Aleynikovtookhewas entitled to.
Ordinarily, a dispute like thiswould end up in civil court. Andthe lawyers arguing in favorofGoldmanwouldbe paid by Goldman.
The firm would sue Aleynikov for all he isworth, which isn’t much, and a jury, or a judge, in some little courtroom at 111 Centre St. would decide whowas right.
And Goldman would probably be entitled to compensation, but only if it could prove that it was actually damaged by what its former employee did.
But Aleynikov’s case, as Ihave written since its beginning, is very strange. Foronething, Goldmannotified the FBI immediately upon learning what Aleynikov had done. And the FBI swooped in and arrested him.
Is there any other company in this country that can get swift action like that from the FBI? Normally, Washington would shoot back: “Why are you bothering us? It’s your problem. You sue the bastard.”
But, as I said, this is no ordinary case. Goldman told the FBI, according to a GMan’s testimony, that Aleynikov had taken “black box” codes, and Goldman “has raised the possibility that there is a danger that somebodywho knewhowto use this program could use it to manipulate the [ stock] market in unfairways.”
I’ve asked this question before: WhatwasGoldmandoing with aprogram that could manipulate the market “in unfair ways?” Is this why the FBI came to the firm’s rescue?
Is thiswhy Goldman, in the current case, asked that the courtroom be closed to the public when the computer codes are discussed? What, exactly, are they trying to hide?
New York Federal Reserve President Bill Dudley may finally be getting it.
He notedover the last twodays that readings on the labor market are too strong, considering what the overall economy is doing. “There was a disconnect even before theMarch employment report [ which showed slow growth] in the sense that the economy was weaker than the trend of payrolls was suggesting,” Dudley said. Here’s the thing, Bill: The labor numbers are wrong — inaccurate, misleading, faked. Once you understand that, you will have achieved total enlightenment.