Flash Boys Chapter 8 - The Real Trial of Sergey Aleynikov
This chapter hit me different than the rest of the book. Maybe because Sergey Aleynikov is from the former USSR, same as me. Maybe because I spent 20 years in IT and know what it feels like when non-technical people judge your work. Probably both.
Chapter 8, “The Spider and the Fly,” is about how a system destroyed a man for doing something every programmer does. And how nobody with actual knowledge was in the room when it happened.
A Trial Where Nobody Understood Anything
Serge’s trial ran for ten days in December 2010. And here’s the thing. The jury was mostly high school graduates. None of them had ever programmed a computer. They literally brought his hard drive into the courtroom and showed it to the jury. As evidence. Like holding up a car engine in front of people who have never driven.
The government’s expert witness was a guy named Benjamin Van Vliet. An assistant professor from Illinois who taught a coding course. He had never done high-frequency trading. Not once. He became an “expert” because Forbes called him about a fiber-optic cable he’d never heard of, and he gave a quote. That led to more journalist calls. Then prosecutors found him.
Van Vliet called Goldman “the New York Yankees” of HFT. A judge in a previous case where he testified said the idea that HFT code was some kind of science was “utter baloney.” This was the expert.
Goldman Employees as Salesmen
Goldman’s people on the witness stand behaved like salesmen for the prosecution. Serge’s former boss said everything at Goldman was proprietary. Serge put it generously: “I wouldn’t say he lied, but he was talking about stuff that he did not understand.”
Misha Malyshev, Serge’s former employer at Teza, actually testified for the prosecution that Goldman’s code was completely useless for what he’d hired Serge to build. Different language. Slow and clunky. But when Malyshev looked over at the jury, half of them were asleep.
The Real Trial at a Wall Street Restaurant
So here’s what happened. Michael Lewis decided the legal system had failed. He organized a second, informal trial over two dinners at an old-school Wall Street restaurant.
The new jury? Half a dozen people who actually knew what they were talking about. Programmers. HFT experts. People from Goldman itself. People from IEX. Guys who had written high-frequency code with their own hands. All had to stay anonymous because they still worked on Wall Street.
What the Real Experts Found
They started by asking personal questions. Figured out quickly he was not just smart but genuinely gifted. “For a technologist to be so totally dominant in so many areas is just really, really unusual,” one said.
Then the details. Serge had “super-user status” at Goldman. One of about 35 people out of 31,000 employees who could log in as administrator. He could have plugged in a cheap USB drive and taken everything. Nobody would have known.
But he took eight megabytes out of nearly fifteen hundred megabytes. That’s like taking a few pages from a library.
The most cynical jurors were shocked by what he did NOT take.
“Did you take the strats?” one asked. The trading strategies. The actual secret sauce.
“No,” said Serge.
“But that’s the secret sauce, if there is one. If you’re going to take something, take the strats.”
“I wasn’t interested in the strats.”
“You had super-user status! You could easily have taken the strats. Why didn’t you?”
“To me, the technology really is more interesting than the strats.”
“You weren’t interested in how they made hundreds of millions of dollars?”
“Not really. It’s all one big gamble, one way or another.”
The Spiral Notebook Analogy
One juror explained it perfectly. You work somewhere for three years carrying a spiral notebook. You write down everything, meetings, ideas, products. You leave and take the notebook. Most people do. It relates to your old job but has almost zero relevance to the new one.
For programmers, code is their spiral notebook. It helps them remember what they worked on. But it has very little to do with what they build next.
Goldman’s code was like a hundred-year-old house. Teza was building new on new land. Why would you take ancient copper pipes and put them in a new building? Making it useful would take more effort than writing from scratch.
Why Did Goldman Call the FBI?
This was the question that actually mattered. Not what Serge did. Why Goldman reacted the way they did.
The jurors had a theory. And it was about bonuses.
Every manager of a Wall Street tech group wants people to believe his guys are geniuses. That the code can’t be replicated. When security tells him a programmer downloaded files, he can’t say “no big deal” because that means the code isn’t special. He can’t say “I don’t know what he took” because that makes him look incompetent. So he pulls the fire alarm.
And one manager protecting his bonus ended with Serge in federal prison.
“I’m actually nauseous,” one juror said as he left dinner and walked down Wall Street. “It makes me sick.”
Prison, Freedom, and Prison Again
Serge went to prison. His wife left, took their three daughters. No money. Almost no friends. His fellow Russian emigre Masha Leder took power of attorney out of solidarity and pity.
But here’s what nobody expected. Every time Masha visited him in prison, she left feeling energized. Serge radiated positive energy. Started talking to people for the first time in his life. Said people in jail had the best stories.
In prison, he lived on beans and rice because he refused to eat meat. Always hungry. But his mind worked fine. A lifetime of programming in noisy open offices prepared him for focusing in a room with hundreds of people. He wrote code on paper. A hundred pages of meticulous eight-point handwriting. He mailed it to Masha, worried the guards would confiscate it.
About a year later, the Second Circuit ruled the laws he was convicted under didn’t even apply to his case. February 2012, he was freed.
Then They Arrested Him Again
A few months later, his lawyer asked the government to return Serge’s passport. It never came. Instead, Serge was arrested again.
Manhattan DA Cyrus Vance put out a press release charging Serge with “accessing and duplicating” Goldman’s “secret sauce.” The press release thanked Goldman Sachs for its cooperation. The prosecutor called Serge a flight risk, which was strange because he’d traveled to Russia and come back between his first arrest and jailing. That prosecutor soon fled the case herself. To a job at Citigroup.
Serge’s lawyer Kevin Marino called Vance’s office. They said they didn’t need Serge punished anymore, just “held accountable.” They wanted him to plead guilty. Marino told them, in the politest terms possible, that they could go fuck themselves.
The Man Who Wouldn’t Break
When they asked Serge at dinner why he wasn’t angry, he smiled and said: “What does craziness give you? What does negative demeanor give you as a person? It doesn’t give you anything.”
He started writing a memoir. The opening line tells you everything about who Sergey Aleynikov is:
“If the incarceration experience doesn’t break your spirit, it changes you in a way that you lose many fears. You begin to realize that your life is not ruled by your ego and ambition and that it can end any day at any time. So why worry?”
I have met people like Serge. In the former USSR, you learn that systems can crush you for no reason. Some people break. Some people find a strange peace in it. Serge found peace. And Goldman Sachs, with all its power and all its money, could not take that from him.
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