The “gold” in Goldman Sachs is looking a little tarnished this week. Fellow T/S blogger Matt Taibbi gave the investment darling the once-over in Rolling Stone and Zero Hedge has been hammering away at Goldman’s use of web traffic on its site for business purposes.
Now it seems a former Goldman employee has absconded with proprietary trading information. According to reports from Reuters and Zero Hedge, one Sergey Aleynikov was arrested at Newark airport on Friday for industrial espionage. Aleynikov had recently quit Goldman for an unnamed Chicago firm.
The heist was so critical that Goldman didn’t even make it on to the NYSE top program trading list last week. It was, in fact, a no-show although it normally dominates the No. 1 spot. What makes the Goldman disappearance even more unusual is that program trading hit an all-time high last week of 48.6%. How could trading hit an all-time high without its leading participant?
The FBI has been brought in to investigate the alleged heist, which The Market Ticker notes is also a bit out of the ordinary at this stage in the game.
But what also caught my eye is the lack of transparency. Neither Goldman nor NYSE saw fit to make any announcement regarding a theft of the first order. Zero Hedge chews on this fact:
Another major question: do Goldman and the NYSE not have a fiduciary responsibility to announce to both shareholders and any interested parties if there has been a major security breach in their trading operations? Certainly this seems like a material piece of information: given that program trading accounted for 49% of all NYSE trading last week, and Goldman as recently as one week ago represented about 60% of all principal program trading, will this be called an issue threatening the National Security of the United States. Shouldn’t all market participants be aware that there is some rogue code in cyberspace that can be abused by the highest bidder, who very likely will not be interested in proving the efficient market hypothesis? What will happened when said bidder goes about trying to front run none other than the “Financial Institution” [GS]?
You think that maybe the New York Stock Exchange and the otherwise ubiquitous Goldman Sachs should have alerted interested parties. Or maybe transparency is only for elected government officials. Shareholders, investors be damned.