Aleynikov Wins a Round

In July 2009, FBI agents arrested Sergey Aleynikov, who had formerly worked in the high-frequency trading business of Goldman Sachs Group Inc.

High-frequency trading has become a good deal more prominet in pubklic/regulatory controversies in the intervening 14 months.

But for what exactly was Aleynikov arrested? The charges were: theft of trade secrets; transportation of stolen property in interstate commerce; and illegal access to a computer without permission. The arrest came soon after Aleynikov had left Goldman, and started work for Teza Technologies. Allegedly, Aleynikov had copied and encryptred files from a Goldman server, uploaded those files to a website, then later to a portable memory device, so he could share it with his new buddies as Teza.

Why bring this all up now? Because I see that a Manhattan district court judge Denise Cote has just dismissed one of the charges, unauthorized access. Aleynikov's alleged actions took place in his final days of employment at Goldman, when he did still have permission to access the firm's computers, and Cote found that he did not exceed the authorization he had been granted.

Prosecution will continue as to the other counts, but this dismissal does show that these sorts of actions are very difficult -- prosecutors have a tough time prevailing.

Which is as it ought to be.