Pick Up My Legal Tab, Programmer Tells Bank

MANHATTAN (CN) - A programmer who beat convictions of stealing highly profitable software code from Goldman Sachs wants the bank to cough up more than $2.3 million to cover his continuing legal fees.

In 2009, Sergey Aleynikov, 42, allegedly downloaded high-frequency trading, or HFT, code that belonged to Goldman Sachs to use for his new employer, Teza Technologies.

Major banks and hedge funds hire teams of programmers to design HFT code that can automatically place electronic trades millionths of seconds faster than their competitors.

Though often criticized as anticompetitive to the common trader, the technology is legal, and banks closely guard the code as a lucrative trade secret.

When Goldman Sachs learned of Aleynikov's alleged breach, executives called FBI Agent Michael McSwain, a Goldman Sachs shareholder, who quickly arrested Aleynikov.

Prosecutors minimized the appearance of a conflict of interest by arguing that the agent owned a negligible number of shares.

U.S. District Judge Denise Cote ruled that the evidence would be an impermissible distraction for the jury, and she did not allow the matter to be heard at trial.

Instead, Aleynikov defended the allegations by insisting that he downloaded the data to extract open source code, which he said belongs to the public.

A jury rejected that defense and convicted him on two counts that led two an eight-year sentence.

Without commenting on the jury's findings, the 2nd Circuit reversed Aleynikov's convictions in February, later explaining that the federal espionage and stolen property charges against him were meant for tangible "goods," not software code.

State prosecutors have since taken up his case through other statutes, and Aleynikov reportedly rejected their first attempt at a plea bargain.

Now, Aleynikov has filed a 16-page federal complaint in New Jersey demanding that Goldman Sachs fund Aleynikov's legal defense as the case heads to trial.

"In defending the federal charges, Aleynikov incurred legal fees and expenses totaling $2,383,002.56, of which he was only able to pay $547,960.00 before being rendered impecunious," the complaint states.

Aleynikov says the bank's bylaws state that the company "shall indemnify to the full extent permitted by law" any officer of the bank or its subsidiary in a "civil, criminal or investigative" proceeding.

Those terms should cover him, Aleynikov says.

He demands more than $2.3 million for the federal charges and an order finding the bank responsible for his legal fees and expenses in state court.

His attorney is Kevin Marino of Marino, Tortorella & Boyle in Chatham, N.J.

Subscribe to Closing Arguments

Sign up for new weekly newsletter Closing Arguments to get the latest about ongoing trials, major litigation and hot cases and rulings in courthouses around the U.S. and the world.

Email *

Submit