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Aleynikov Appeal Decision

Aleynikov Appeal Decision

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Published by: steven_musil on Apr 12, 2012
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11-1126United States v. Aleynikov
UNITED STATES COURT OF APPEALS
12
FOR THE SECOND CIRCUIT
34August Term, 2011567(Argued: February 16, 2012 Decided: April 11, 2012)89Docket No. 11-11261011- - - - - - - - - - - - - - - - - - - -x1213
UNITED STATES OF AMERICA 
,1415
 Appellee
,1617- v.-1819
SERGEY ALEYNIKOV 
,2021
Defendant-Appellant
.2223- - - - - - - - - - - - - - - - - - - -x2425Before:JACOBS, Chief Judge, CALABRESI and26POOLER, Circuit Judges.2728Sergey Aleynikov appeals from his conviction, following29a jury trial, for stealing and transferring proprietary30computer source code of his employer’s high frequency31trading system in violation of the National Stolen Property32Act, 18 U.S.C. § 2314, and the Economic Espionage Act of331996, 18 U.S.C. § 1832. On appeal, defendant argues, inter34alia, that his conduct did not constitute an offense under35
 
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either statute. He argues that: [1] the source code was not1a “stolen” “good” within the meaning of the National Stolen2Property Act, and [2] the source code was not “related” to a3product “produced for or placed in interstate or foreign4commerce” within the meaning of the Economic Espionage Act.5The judgment of the district court is reversed. Judge6Calabresi concurs in the opinion and has filed an additional7concurring opinion.8KEVIN H. MARINO, Marino,9Tortorella & Boyle, P.C.,10Chatham, NJ, for11Appellant.1213JOSEPH P. FACCIPONTI (JUSTIN S.14WEDDLE, on the brief), Assistant15United States Attorney, for16PREET BHARARA, United States17Attorney, Southern District of18New York, New York, NY, for19Appellee.2021DENNIS JACOBS, Chief Judge:2223Sergey Aleynikov was convicted, following a jury trial24in the United States District Court for the Southern25District of New York (Cote, J.), of stealing and26transferring some of the proprietary computer source code27used in his employer’s high frequency trading system, in28violation of the National Stolen Property Act, 18 U.S.C.29§ 2314 (the “NSPA”), and the Economic Espionage Act of 1996,30
 
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18 U.S.C. § 1832 (the “EEA”). On appeal, Aleynikov argues,1inter alia, that his conduct did not constitute an offense2under either statute. He argues that: [1] the source code3was not a “stolen” “good” within the meaning of the NSPA,4and [2] the source code was not “related to or included in a5product that is produced for or placed in interstate or6foreign commerce” within the meaning of the EEA. We agree,7and reverse the judgment of the district court.8 9
BACKGROUND
10Sergey Aleynikov, a computer programmer, was employed11by Goldman Sachs & Co. (“Goldman”) from May 2007 through12June 2009, developing computer source code for the company’s13proprietary high-frequency trading (“HFT”) system. An HFT14system is a mechanism for making large volumes of trades in15securities and commodities based on trading decisions16effected in fractions of a second. Trades are executed on17the basis of algorithms that incorporate rapid market18developments and data from past trades. The computer19programs used to operate Goldman’s HFT system are of three20kinds: [1] market connectivity programs that process real-21time market data and execute trades; [2] programs that use22

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