Goldman Indictment

By MICHAEL GRAY

Goldman Sachs was ordered by a federal judge in New York City to provide the court with Sergey Aleynikov’s performance reviews of his work as a computer programmer for the Wall St. banker.

Aleynikov was charged last month with stealing proprietary trading code, which was characterized as allowing the user to “manipulate the markets,” according to a federal prosecutor.

Goldman’s lawyer Matt Friedrich argued that parts of Aleynikov’s personnel file were proprietary information for the firm. Aleynikov’s lawyer said they needed the files for his defense.

The fact that Goldman had to be ordered to turn over the employee files, when the bank-holding company filed the charges against Aleynikov, tells me we will never see any deposition in this case.

Aleynikov will be allowed to plea down to a jaywalking ticket and be released with time served. The last thing Goldman wants is for sunshine to beam down onto what the firm was doing with this program.

Front-running trades by sniffing the action before the information is posted on the exchanges is but one rumor circulating. Others believe that this program ties many trading programs together such as the program above with high-frequency trading platforms, which allowed the bank to post record trading profits this year.

FED UP AGAIN

The Federal Reserve’s FOMC is in day two of its meeting this week to discuss the fate of the Bernanke regime. Many of the Fed’s actions within the markets to prop up credit and debt markets are set to wind down in September.

Bond markets are betting that the Fed will increase in quantative easing not reign in monetization. The pits believe Bernanke will pull a Bank of England and surprise markets with a big injection to battle rising rates across the board but especially in the mortgage markets.

Let’s not forget that the Chinese were in town last week and they expressed concern over the length of the paper being offered, but the rising rates cratering the value of its existing holdings.

This is the benchmark that President Obama will use for whether Bernanke will be re-nominated for Fed chief. Work with the administration on this and you’re in Ben.

For more on Wall and Washington and the economy see: http://mgray12.wordpress.com

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