High frequency trading is an often discussed topic. In some instances, the discussion centers on if it gives some traders an unfair advantage. In others, the talk focuses on its market impact.

Last week, a jury in Manhattan considered issues about the proprietary nature of high frequency trading systems. Specifically, the jury was asked to determine if former high speed trader Samarth Agrawal was guilty of theft of trade secrets and the interstate transportation of stolen property from Societe Generale. The charges stem from a claim the defendant stole high frequency trading computer code. U.S. v. Agrawal (S.D.N.Y.); see also Press Release, USAO, S.D.N.Y. Dated Nov. 19, 2010.

Mr. Agrawal was employed at SocGen’s New York offices from March 2007 through November 2009. Initially he was an analyst. Later, he became a trader in the firm’s high frequency trading group.

SocGen’s group engages in sophisticated, high speed trading on various securities markets. The unit generates millions of dollars in profits. The trading is based on a computer system and the related computer code SocGen developed over several years. The system and code is highly confidential. The firm took several steps to maintain its confidentiality. Those steps include limiting access to only necessary employees. Even those with access were restricted to only a portion of the system. The firm also monitored the system and restricted electronic access.

In April 2009, Mr. Agrawal was promoted to a position within the high frequency trading group. The next day he printed out hundreds of pages of code from the system. Subsequently, he began negotiations with Tower Capital Research LLC to secure a position in which he would build the firm a high frequency trading system. Mr. Agrawal assured the hedge fund that he understood SocGen’s unit and could build the system for them.

Subsequently, Mr. Agrawal resigned from SocGen. Prior to beginning work at Tower in April 2010, he disclosed portions of the SocGen computer code to the firm.

At trial, the government introduced a film from a surveillance camera showing Mr. Agrawal printing out the computer code. The government also furnished the jury with the computer print out of the code Mr. Agrawal had made prior to resigning from the firm. The print out had been seized from his home after his arrest. The jury found Mr. Agrawal guilty on both counts. A date for sentencing has not been set.