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EnlargeMario Tama / Getty Images News reader comments 15 Share this story A New York state appellate court has restored the criminal conviction of an ex-Goldman Sachs programmer who was convicted of stealing trade secrets—high-frequency trading source code—before leaving his job in 2009. “It would be incongruous to allow a defendant to escape criminal liability merely because he made a digital copy of the misappropriated source code instead of printing it onto a piece of paper,” the panel said, according to Bloomberg. Sergey Aleynikov was convicted in federal court in 2010 on one count of stealing trade secrets and one count of transporting stolen property. He was released from prison when the United States Court of Appeals for the Second Circuit overturned the conviction in 2012.

The appeals court wrote that Aleynikov did not steal anything physical when copying the source code because it was done over the Internet and did not violate the National Stolen Property Act. After that ruling, state charges were brought, this time under New York Penal Code § 165.07 Unlawful Use of Secret Scientific Material.

That legislation was written in 1967 and specifically refers to “a tangible reproduction.” Aleynikov was initially found guilty by a New York jury trial in May 2015. Manhattan District Attorney Cyrus Vance, Jr. sent the case up to the Appellate Division, where the prosecutor lost the case in July 2015. Aleynikov, who was featured in the book Flash Boys, can now appeal further to the New York Court of Appeals, the court of last resort within the Empire State.
Too big to fail or too big to work? Analysis The value of distributed ledgers and blockchain tech to the financial sector has again come under the spotlight following the departure of several entities from prominent blockchain consortium R3: namely Goldman Sachs, Santander, Morgan Stanley and the National Australian Bank. All four left the consortium this month, and with little public explanation. R3's official statement on the departures isn't particularly revealing either, essentially claiming only that it has always accepted and expected a high churn rate among its members.
Spokespeople offer the line that “developing technology like this requires dedication and significant resources, and our diverse pool of members all have different capacities and capabilities which naturally change over time.” The departed's capacities and capabilities have not significantly changed however, relative to other R3 members. What has obviously changed for Goldman Sachs (a founding member) Morgan Stanley (a second tranche introduction) and Santander (a third tranche member) is the swollen size of the consortium those businesses were joining. At least it is described as a consortium. R3 is, more exactly, a limited liability company receiving funding from its financial sector members. While it does not provide a complete members list, R3 is currently believed to have over 70 financiers — including some of the largest investment banks in the world — and it seems to be precisely because of its rapid expansion, up from an initial nine in September 2015, that some of those earlier joiners are leaving. Martha Bennett, an analyst with Forrester, told The Register that she saw “some quite complex dynamics at work here, given the different strands to R3's activities, the prolonged discussions around the fund-raising, the decision to open-source Corda, and so on,” all of which could have contributed to the exodus. Speaking to The Register, Dr Garrick Hileman, of the University of Cambridge's Centre for Alternative Finance, noted that “while the assembly of so many major banks by R3 was impressive, such a large number of members inevitably leads to organisational challenges.
It has not gone unnoticed that the proofs-of-concept that R3 has produced have had a very limited number of participants.” As we wrote back in September, the fintech execs seem capable of making the most exciting innovations boring, and their approach to the blockchain has been exemplary, especially when those execs seem to be searching for a commercial advantage through the early adoption of a “disruptive” technology. “What’s happening at R3 may be indicative of the distributed ledger space in general,” Hileman told The Register. “Many executives over the last year were seduced by the blockchain buzz, but now six to 12 months on, I expect we’ll see a blockchain shakeout in 2017.
Some previously hyped blockchain use-cases are likely to be tabled or shelved, while others in less regulated areas than capital markets are more likely to be deployed.” Considering the number of companies involved in the consortium, there has inevitably been plenty of disagreement on what that “disruptive” technology should be, with few of the proofs-of-concepts offering interoperable, let alone complementary, services. Hileman told The Register that he thought “it's important to look at which companies have withdrawn from the consortium.” He noted that Goldman Sachs, “arguably the top investment bank in the world, may have had a hard time seeing how it could obtain an edge within such a large group.” That member size makes it “difficult for Goldman to control and influence the consortium’s direction,” claimed Hileman. “There is an obvious conflict with such fiercely competitive companies, all seeking to drive forward their own advantage, working together in harmony on democratizing and transparency enhancing technology.” He added: “R3 employs many of the most talented people in the blockchain industry, so some will see their setbacks as a setback for the overall industry. However, public blockchains, such as Bitcoin and Ethereum, arguably gain from the lack of cohesion at companies like R3.

The most compelling aspect of R3 is its consortium members, not its technology.” Bennett said: “During the first six months or so of the consortium's life, it looked like to focus was to identify the most promising use case(s) and then proceed with figuring out how to develop the required processes and software to translate them into blockchain reality.” She added: “Most importantly, with the participants at the time, it was actually possible to see how they might converge on a set of use cases that would be relevant to most, if not all.

Even then, it would have been a challenge to get all members aligned around the governance principles and common processes, etc, that are a prerequisite of a successful blockchain deployment." Bennett continued: “Looking at the sprawling membership R3 has now from quite disparate segments of financial services sector (including insurance and payments), it's difficult to see how any kind of alignment can be achieved.” ® Sponsored: Customer Identity and Access Management
Associated with Financial Services ISAC (FS-ISAC), the new FSARC works more closely with government partners for deeper threat analysis and systemic defense of financial sector. In tandem with its long-standing intelligence-sharing organization, the American financial services industry has formed an organization working on its strategic, systemic cyber-defense and resilience.

The formation of this new Financial Systems Analysis and Resilience Center (FSARC) was announced by the Financial Services Information Sharing and Analysis Center (FS-ISAC), today.   FSARC is the brainchild of eight large banks that are members of FS-ISAC - Bank of America, BNY Mellon, Citigroup, Goldman Sachs, JPMorgan Chase, Morgan Stanley, State Street, and Wells Fargo.

Through FSARC, large banks will have "closer collaboration" with government partners in the FBI, Department of Homeland Security, and US Department of Treasury.  While FS-ISAC continues to be focused on distributing timely information about active threats, FSARC will take a longer view -- performing deeper analysis to create long-term strategies to address systemic risks across financial products and practices. As Andrew Hoerner, FS-ISAC vice president of communications explains, "FS-ISAC is focused on real-time threat intelligence sharing for incident response and prevention.

FSARC is focused on proactive analysis at a meta level to identify and analyze threats and risks across the sector and come up with solutions to prevent emerging threats and risks." FSARC will use the same "circle of trust" membership model used by FS-ISAC. Bank of America’s Siobhan MacDermott and JPMorgan’s Greg Rattray will serve as interim Co-Presidents "until the center reaches full operational capability."  The formation of FSARC comes on the heels of (but not in response to) US bank regulators' releasing draft rules for cybersecurity that would require financial services organizations to (among other things) recover from any cyberattack within two hours, and finance leaders at a G7 meeting pushing a global financial cybersecurity framework.   Dark Reading's Quick Hits delivers a brief synopsis and summary of the significance of breaking news events.

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Enlarge / WikiLeaks founder Julian Assange comes out on the balcony of the Ecuadorian embassy to address the media in central London on February 5, 2016.Ben Stansall/AFP via Getty Images reader comments 11 Share this story Ecuador, the nation that ...
Enlarge / ST LOUIS, MO - OCTOBER 09: Democratic presidential nominee former Secretary of State Hillary Clinton (R) speaks as Republican presidential nominee Donald Trump looks on during the town hall debate at Washington University on October 9, 2016 in St Louis, Missouri.Win McNamee/Getty Images reader comments 75 Share this story Sunday night's debate between Democratic presidential nominee Hillary Clinton and Republican nominee Donald Trump wasn't focused on tech issues, with the showdown overshadowed by a damaging video in which Trump made vulgar comments about women. But both Clinton's e-mail and the role of Wikileaks made appearances. Early on, Trump referred to Clinton's use of a private email server while serving as Secretary of State and then made the extraordinary claim that if elected president, he'd appoint a special prosecutor in order to investigate and jail Clinton for how she handled classified information. Clinton's email server use was investigated by the FBI, whose director, Republican appointee James Comey, said that no prosecutor would find grounds to prosecute Clinton. "It's just awfully good that someone with the temperament of Donald Trump is not in charge of the law in this country,” said Clinton, in response. “Because you’d be in jail," Trump interjected. The Russian role There was also a brief exchange about Wikileaks, which on Friday released alleged excerpts of speeches Clinton made to investment bankers at Goldman Sachs, which Clinton had previously refused to make public. Debate moderator Martha Raddatz asked Clinton about a statement she purportedly made in one of those speeches about how politicians sometimes need a "public and a private position." "Is it OK for politicians to be two-faced?" asked Raddatz. "Is it acceptable for politicians to have a private stance on issues?" Clinton said she was citing Abraham Lincoln describing how he got the 13th Amendment, which abolished slavery, passed through Congress. "Convincing some people, he used some arguments," Clinton said. "Convincing other people, he used other arguments." Clinton went on to condemn Wikileaks, saying that it was being used by Russian-government directed hackers who were attempting to disrupt US elections—an allegation recently made by the Department of Homeland Security. "Our intelligence community just came out and said, in the last few days, that the Kremlin... are directing attacks, are hacking American accounts to influence the election," said Clinton. "Wikileaks is part of that, as are other sites." Never in American history has a foreign power taken such steps, she added. "Believe me, they're not doing it to get me elected," she said. "They're doing it to help Donald Trump... We deserve answers. We should demand that Donald Trump release all his tax returns." "She lied," Trump responded. "Now she's blaming the lie on the great Abraham Lincoln.
I don't know Putin.
I think it would be great if we got along with Russia, but I don't know Putin." "She doesn’t know if it's the Russians doing the hacking," he continued. "They’re trying to tarnish me with Russia.
I know nothing about the inner workings of Russia.
I have no loans from Russia.
I have a great balance sheet."