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Five Dumbest Things on Wall Street: July 10

Stocks in this article: GS BAC JPM

Goldman's Not So Golden Boy

Sergey Aleynikov's dream was to be a big-shot trader. Turns out he may have traded away a lucrative career at Goldman Sachs (GS) for a prison cell.

Aleynikov, who was paid $400,000 a year as a computer programmer for the investment bank, was arrested by the FBI July 3 and charged with "theft of trade secrets." Specifically, the 39-year old Russian immigrant is accused of stealing codes used for Goldman's highly sophisticated, rapid-fire stock and commodities trading and then uploading them to a computer server in Germany. He was released Monday after meeting his $750,000 bail.

Aleynikov told authorities his plan was merely to gather "open source" files on which he had worked, but he "later realized that he had obtained more files than he intended," according to an FBI affidavit filed in the case. Goldman declined to comment, but a Reuters source said the firm was unharmed by the computer breach.

Aleynikov worked at Goldman from May 2007 until June 5. On July 2, he started working at Teza Technologies, a Chicago-based hedge fund focused on high-volume trading. Teza has since suspended him without pay, according to Bloomberg, after learning of the allegations.

We here at The Five Dumbest Lab fully subscribe to the rule of innocent until proven guilty, so we won't officially condemn Aleynikov until a jury weighs in. (Hey! We may be snarky, bordering on obnoxious, but we do have our principles.)

That said, we do operate on a dumb until proven not dumb protocol. And in this case, Aleynikov is undoubtedly guilty on all counts of grand stupidity.

Based on analysts' 2009 earnings forecasts, Goldman is on track to pay out as much as $20 billion this year, or about $700,000 per employee. So Aleynikov was in line for a huge pay day just by sticking around till bonus time. And whether or not his intent was criminal, only an idiot would screw around with Goldman's top-secret trading recipe so close to leaving the firm.

Once the government gains access to the German server, prosecutors will be able to determine if Aleynikov transferred other confidential data. If the feds can prove Aleynikov planned to use the code at his new company, then it's likely his once-golden goose will be cooked.

Dumb-o-meter score: 95 -- Clumsy criminal or unknowing oaf? Either way, Aleynikov was too greedy even for Goldman.

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