On August 1, 2013, the Second Circuit upheld Samarth Agrawal’s 2010 conviction under the Economic Espionage Act (EEA). Agrawal, who had been employed as a trader by the French bank Société Générale (SocGen), was charged with delivering SocGen’s High Frequency Trading (HFT) system’s source code to a rival hedge fund, New York-based Tower Research Capital. On November 19, 2010, a jury found Agrawal guilty on two counts: theft of trade secrets (18 U.S.C. § 1832); and interstate transportation of stolen property (18 U.S.C. § 2314). He was subsequently sentenced to 3 years’ imprisonment, which he is presently serving.
The affirmation was particularly noteworthy considering that just last year, the Second Circuit reversed a conviction in a case with strikingly similar facts. In United States v. Aleynikov, a programmer sold source code to Goldman Sachs’ HFT platform to a rival trading firm. United States v. Aleynikov, 676 F.3d 71 (2d Cir. 2012). The Second Circuit distinguished Agrawal from Aleynikov in two ways. First, the court noted that the HFT system in Agrawal was used in interstate commerce, where the HFT system in Aleynikov was not. Second the court noted that where Aleynikov had stolen the HFT source code in intangible form (on a USB memory stick), Agrawal had printed out the code on paper.
In dissent, Judge Pooler took issue with these distinctions, writing, “In order to circumvent Aleynikov, decided just months prior to oral argument in this case, the majority attempts to distinguish the present facts through mischaracterizations, while simultaneously stretching Aleynikov and disregarding the principle of stare decisis.”