It’s kind of ironic how Martha Stewart became the poster child for cracking down on insider trading activity, even though it was never even proven or substantiated. For those of you that remember the movie Airplane with Leslie Nielsen, it reminds me of the scene where the police officers detain the little old lady while allowing a dozen terrorists to walk right through the security gate armed with bazookas. Now with Goldman Sachs, we’re faced with likely the greatest inside information and market manipulation scheme of all time — way larger than the usual trading on inside information that seems to go on every day in the markets. And once again, I doubt a single one of the people responsible will end up in jail over it (let alone receive anything much more than a slap on the wrist, if that). More likely, it’ll be brushed under the rug with the rest of the manure and never heard of again. But should we really expect anything different from our government, which at this point exists as little more than a taxpayer-subsidized wholly-owned subsidiary of Goldman Sachs?! Shhhh, thou shalt not use the lordGoldman’s name in vain!
It was also quite telling that Goldman was able to have the FBI detain their programmer Sergey Aleynikov within a day’s notice on charges that the theft of their code was an issue of national security as it could enable others to manipulate the markets. Of course, I’m sure that’s not what Goldman would be using it for (uh huh)… But I suppose that the Plunge Protection Team a.k.a. Goldman Sachs does require “special access” to the markets to do its job and assure it stays in the black (and then sooooome).
It’s also interesting that Sergey Aleynikov’s talents seem to lie in packet sniffing network traffic for telecom companies in order to analyze and route high loads of network traffic as smoothly and efficiently as possible. This would be extremely valuable for getting a peak at a data stream even before an order makes it to the exchange floor, let alone be displayed for the world to see. As if all the dark pools hasn’t made trading tough enough already, how would it feel to know someone’s peaking at your order before it even reaches the exchange. Guess it would be kind of like playing poker where you get to take a quick peak at each card just before it’s dealt. Now that’s some edge to have! Anyway, OBAMAers.com (“Goldman Sachs Code Theft BOMBSHELL?”) and DailyKos.com (Incredibly Shrinking Liquidity as Goldman Flushed Quant Trading”) posted some excellent blog entries on the subject. So instead of trying to reiterate what they’ve already done so well, I’ll end here and let you check out their posts for the rest of the gory and grisly details.