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A overview of the news regarding Goldman Sachs' program trading and the alleged potential for stock market manipulation.
Matt Taibbi describes in the Rolling Stone Magazine how Goldman Sachs has engineered every major market manipulation since the Great Depression. New Jersey news: A Russian-born computer programmer from North Caldwell was arrested by the FBI at Newark Liberty International Airport and charged with trade-secret theft, authorities said. Sergey Aleynikov, 39, a former software designer for Goldman Sachs, posted 10 percent of his $750,000 bail and was released from a Manhattan jail this afternoon.
Bloomberg: Sergey Aleynikov, the former Goldman Sachs Group Inc. computer programmer arrested last week for stealing software, told an FBI agent he uploaded proprietary code to an encrypted server he had used on “multiple occasions.”
Reuters: The owner of a website onto which a purportedly stolen Goldman Sachs Group Inc computer code was downloaded has declined to say whether or not other people accessed the code while it was on the site.
Bloomberg: [..] Assistant U.S. Attorney Joseph Facciponti told a federal magistrate judge at his July 4 bail hearing in New York. The 34-year-old prosecutor also dropped this bombshell: “The bank has raised the possibility that there is a danger that somebody who knew how to use this program could use it to manipulate markets in unfair ways.”
Did Goldman really tell the government its high-speed, high-volume, algorithmic-trading program can be used to manipulate markets in unfair ways, as Facciponti said? And shouldn’t Goldman’s bosses be worried this revelation may cause lots of people to start hypothesizing aloud about whether Goldman itself might misuse this program?
Reuters: Now Goldman, expected to announced second-quarter earnings on Tuesday, finds itself in a no-win situation.
Internal Memo of the New York Stock Exchange in an apparent attempt to cover-up matters: The purpose of this Information Memo is to advise all member organizations that the New York Stock Exchange LLC (“NYSE”) will be decommissioning the requirement to report program trading activity via the Daily Program Trading Report (“DPTR”), which was previously approved by the Securities and Exchange Commission (the “Commission”).1 The last trade date for which member organizations will be required to file the DPTR with the Exchange will be July 10, 2009 and therefore the last required date to submit the DPTR will be July 14, 2009.
Blog ZeroHedge: The most recent, presumably correct, data has been released by the NYSE: Goldman total principal program trading has declined by 60% from 1,336 million shares in the prior week to 571 million in the current. The end of the Russell rebalancing likely played a major role in the decline as overall NYSE program trading volume was also impacted by a comparable margin. Yet what was odd is that last week's Russell indexing action was the lowest volume rebalancing event in years.
Details about the trading program can be found here. To be continued... See also our previous articles on this topic: Goldman Sachs' magic (II) Goldman Sachs' magic (I) Government Sachs is in control Did Goldman goose oil?
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