They didn't jail him, however they provided the impetus to the FBI to arrest him.
Quotes from the book, p.148 (EDIT: These quotes are in the article here also!!):
"What Serge did not yet know was that Goldman has discovered his downloads- of what appeared to be the code they used for their proprietary high speed trading stock market trading- just a few days earlier, even though Serge had sent himself the first batch of code months ago. They'd called the FBI in haste and had put McSwain [FBI agent who arrested Serge] through what amounted to a crash course in high-frequency trading and computer programming. McSwain later concluded that he didn't seek out independent expert advice to study the code that Serge Aleynikov had taken, or seek to find out why he might have taken it. "I relied on statements from Goldman employees", he said. He had no idea himself of the value of the stolen code ("representatives of Goldman told me it was worth a lot of money"),or if any of it was actually all that special ("representatives of Goldman told us there were trade secrets in the code")."
"The FBI's investigation before the arrest consisted of Goldman explaining some extremely complicated stuff to McSwain that he admitted that he didn't fully understand- but trusted that Goldman did. Forty-eight hours after Goldman called the FBI, McSwain arrested Serge."
So effectively Goldman got Serge arrested, using a clueless agent as a pawn. Some of the code was originally open source, none of the code involved trading strategies (the really valuable stuff) and Goldman's word was enough to convince the FBI that Serge was a dangerous criminal and a flight risk, and ruined his life.
>none of the code involved trading strategies (the really valuable stuff)
Wrong. In HFT, the 'strategies' are the least complex part. They are often dead simple. A well written (fast) exchange connection is at least 70% of the game.
He's a thief and he got caught, but the HN community don't like that narrative.
The HFT experts from the book were amazed he didn't walk away with trading strategies, rather "plumbing" code, which is useless outside of Goldman (specific to their network, also his new employer used a different programming language) apart from a memory jogging exercise, like keeping a notepad. It would be much easier to write the new code from scratch rather than reuse the Goldman code.
And he didnt steal code, he backed it up on a subversion repo. There was unlikely any malicious intent, yet you labelled him a thief. If he was so obviously a thief, why would HFT experts be furious what happened to him, once they learned the details? Why were charges dropped? Why use an agent with no clue in the matter as a pawn? What you're saying doesn't make sense.
The headline is a lie, but the other part - Goldman did not steal open source, because what is being given for free can not be stolen. (Moreover, if they didn't redistribute the code (which I assume they didn't, based on the article), they didn't break the OS licence either.)
So basically there should have been several unbiased experts brought in before he was arrested to determine if the code truly contained any trade secrets?
I think that the government should be liable for all reasonables damages caused by police investigations. Not just here, but in general - it's obvious the police use investigation as a form of blackmail at occasion, and that's just wrong. As part of a conviction, some of those damages might be voided to the degree the damage was necessary and proportional to the crime.
Also, from the point of view of efficiency in society, this is a particularly nasty cost since its borne not by those that cause it (the officers), nor by those hiring them (the government), nor is it ever accounted for as a loss. I think this encourages malpractice. Certainly if you observe how the police go about enforcing the law once they've decided somebody is guilty in their own eyes there doesn't seem to be any kind of restraint whatsoever. To the extent they can, they're single-party judge, jury and enforcement in one, exactly the kind of thing the idea of a justice system is supposed to prevent.
I'm not an expert at all, but sounds like that would've definitely helped.
The author, Michael Lewis, actually conducted an informal trial in a restaurant, with (neutral) HFT experts, who were even more furious than Serge was when they learned how he'd been treated.
I wouldn't be surprised if non-technical executives in Goldman simply saw a Russian leaving for a competitor, and assumed he was stealing valuable secrets without investigating properly.
Worst part is, even after the details become apparent (see other comments here), Goldman or the FBI are completely unable to admit any fuck ups, and continue hounding him.
How the hell does anyone determine that? If someone walked out of Id during Quake III development with Carmacks's inverse square root (http://stackoverflow.com/questions/1349542/john-carmacks-unu...), would that be a trade secret? It's not like an inverse square root is a secret, but what about doing it faster than anyone else?? Writing the best 3D engine was part of their success, and writing the fastest order routing/exchange is a big part of HFT. He took source code from GS to go to a competitor that had offered him a lot of money, it's hard to have much sympathy for the guy.
Quotes from the book, p.148 (EDIT: These quotes are in the article here also!!):
"What Serge did not yet know was that Goldman has discovered his downloads- of what appeared to be the code they used for their proprietary high speed trading stock market trading- just a few days earlier, even though Serge had sent himself the first batch of code months ago. They'd called the FBI in haste and had put McSwain [FBI agent who arrested Serge] through what amounted to a crash course in high-frequency trading and computer programming. McSwain later concluded that he didn't seek out independent expert advice to study the code that Serge Aleynikov had taken, or seek to find out why he might have taken it. "I relied on statements from Goldman employees", he said. He had no idea himself of the value of the stolen code ("representatives of Goldman told me it was worth a lot of money"),or if any of it was actually all that special ("representatives of Goldman told us there were trade secrets in the code")."
"The FBI's investigation before the arrest consisted of Goldman explaining some extremely complicated stuff to McSwain that he admitted that he didn't fully understand- but trusted that Goldman did. Forty-eight hours after Goldman called the FBI, McSwain arrested Serge."
So effectively Goldman got Serge arrested, using a clueless agent as a pawn. Some of the code was originally open source, none of the code involved trading strategies (the really valuable stuff) and Goldman's word was enough to convince the FBI that Serge was a dangerous criminal and a flight risk, and ruined his life.