We have been following the case of Sergey Aleynikov and thuggish behavior of Goldman Sachs since the first day. Thanks to Michael Lewis, the case is now getting public attention outside financial communities. The following blog post is well-written.
Also, the article of Michael Lewis is well worth reading.
Serge quickly discovered, to his surprise, that Goldman had a one-way relationship with open source. They took huge amounts of free software off the Web, but they did not return it after he had modified it, even when his modifications were very slight and of general rather than financial use. Once I took some open-source components, repackaged them to come up with a component that was not even used at Goldman Sachs, he says. It was basically a way to make two computers look like one, so if one went down the other could jump in and perform the task. He described the pleasure of his innovation this way: It created something out of chaos. When you create something out of chaos, essentially, you reduce the entropy in the world. He went to his boss, a fellow named Adam Schlesinger, and asked if he could release it back into open source, as was his inclination. He said it was now Goldmans property, recalls Serge. He was quite tense. When I mentioned it, it was very close to bonus time. And he didnt want any disturbances.
Rajiv Sethi adds on the high-frequency trading, which is nothing more than an elaborate front-running operation using the fastest computers. Why it is not considered a crime is possibly the biggest mystery of our era.
It is commonly argued that high frequency trading benefits institutional and retail investors because it has resulted in a sharp decline in bid-ask spreads. But this spread is a highly imperfect measure of the value to investors of the change in regime. What matters, especially for institutional investors placing large orders based on fundamental research, is not the marginal price at which the first few shares trade but the average price over the entire transaction. And if their private information is effectively extracted early in this process, the price impact of their activity will be greater, and price volatility will be higher in general.
After all, it was a large order from an institutional investor in the S&P; futures market that triggered the flash crash, sending indexes plummeting briefly, and individual securities trading at absurd prices. Accenture traded for a penny on the way down, and Sothebys for a hundred thousand dollars a share on the bounce back.
Essentially criminals took over the criminal justice system to throw open- source programmers in jail for sharing modifications to open-source code.
Only in America !
If you want to look at the actual code and see whether you can use it to accelerate bioinformatics programs, please follow this link: