THE FLASH CRASH
Please come with me on a short but important journey. The journey starts in Chicago where we will board a flight to New Jersey. It’s like any other flight we have ever taken. We are looking forward to getting home and enjoy the 4th of July. It will be a great weekend. We’ll celebrate with family, we will remember the time that our dad took us to the American cemetery at Anzio, on the shores of a beautiful Italian fishing village warmed by the winds of the Mediterranean, where he wept openly for those that he knew, for those that had died. (If you don’t know Anzio and its battle you really should learn about it.) We are almost home; the pilot is turning the plane to line up with the runway. By the way….have you noticed that man over there? He seems very odd.
Trudging up the gangway and into the airport will be the last queue that we’ll have to succumb to for at least the next 3 days and then we stop dead in our tracks. There is some kind of commotion going on in front of us. That man we were looking at seems to be in some sort of trouble. Men with shiny blue rain jackets are surrounding that odd man. The men have some sort of initials on their back, but then we instantly recognize FBI………..
Sergey Alynikov is arrested, it’s July 3rd, 2009. Three days later there is a story in the NY Times. Sergey Alynikov has been accused of stealing software code. This isn’t just any sort of software code. This software code was Goldman Sachs software code. This software code according to the New York Times article by Alex Berenson, “Arrest Over Software Illuminates Wall Street Secret,†states that the code, “could be used to “unfairly manipulateâ€stock prices.†Holy crap!
It seems that by taking advantage of this code Goldman Sachs is enabled to buy and sell shares of stock in milliseconds. In effect it allowed Goldman to get in front of other firms to take advantage of their inferior trading system software. Pretty cool, does it really work?
Well, don’t fret, Alex has done a pretty good job of letting us know that the former head of markets systems at Fidelity Investments Bernard S. Donefer, who happens to be a lecturer at Baruch College, says that they potentially provide BILLIONS in profitability to their firms. So believe it, Goldman Sachs has developed a software program that potentially can manipulate the stock market, looks like it is being used to provide BILLIONS in profitability to the firm that created it, and Sergey stole it.          Holy Crap…….
But it gets better! Sergey, who came to the U.S. in 1991, sent the software to Germany. You know, point and click and whoosh! A multimillion dollar software package developed by Goldman Sachs that makes them BILLIONS went bye-bye….to some dude in Germany. The assistant U.S. attorney tells the NY Times, “GS stands to lose its entire investment in creating this software ……which is millions upon millions of dollars.† (see the Furry Brown Dog Blog, “On Goldman Sachs’ illegitimate high frequency program trading.â€)
ENTER Senator Chuck….the infamous, “after all the little guy doesn’t really care.” (Hey Chuck, it’s Lloyd, you got a minute?) …………….more tomorrow………..
Chuck’s in a huff!