Apparently a programmer for Goldman Sachs stole the source code for the software Goldman uses to place high volume trades.
I knew that's how they made their money, but it's interesting that they were working with such small margins. They say if someone gets a hold of the source code they could potentially predict what Goldmans will do and be able to out trade them.ArsTechnica said:In a nutshell, the \"black box\" trading platforms of Goldman and other banks use a combination of proprietary, secret algorithms and the fastest hardware available to take in a torrent of news and other market data and generate a stream of trades that are timed to the millisecond. So, instead of operating on the old stock market adage, \"buy on the rumor, sell on the news,\" a high-frequency trading platform like Goldman's will buy a few milliseconds after the news hits, then sell moments later at a very small premium to other traders and platforms who didn't get the news in (or their trades out) quite as fast. Do this billions of times a day, and voila, you're printing money.