UPDATE 1-Court affirms U.S. code theft conviction of ex-SocGen trader
* Appeals court rules on high-frequency trading code theft
* Indian citizen broke trade secrets, stolen property laws -ruling
* Decision distinguishes case from ex-Goldman programmer
NEW YORK, Aug 1 (Reuters) - A U.S. appeals court upheld the conviction of a former Societe Generale trader for stealing proprietary high-frequency trading code from the French bank, a decision that boosts prosecutors' efforts to deter corporate espionage.
Thursday's decision against Samarth Agrawal, a citizen of India, by the 2nd U.S. Circuit Court of Appeals distinguished his case from the same court's February 2012 order to overturn the conviction of former Goldman Sachs Group Inc programmer Sergey Aleynikov for a similar computer code theft.
Both defendants had been charged with violating the federal Economic Espionage Act (EEA), which makes it illegal to steal trade secrets, and the National Stolen Property Act (NSPA).
But the 2nd Circuit said only Agrawal, who worked in SocGen's offices in New York, broke both laws as they existed at the time of the federal charges. Late last year, the U.S. Congress amended the EEA to clarify its broader reach.
"In terms of moral culpability, there may be little to distinguish Agrawal from the defendant in Aleynikov," Circuit Judge Reena Raggi wrote for a 2-1 majority, in a case that took more than 13 months to decide. "But it is Congress' task, not the courts', to define crimes and prescribe punishments."
Agrawal's lawyer Marshall Mintz did not immediately respond to a request for comment. Julie Bolcer, a spokeswoman for U.S. Attorney Preet Bharara in Manhattan, declined to comment.
SocGen spokesman Jim Galvin said the bank is pleased the conviction was upheld, and is committed to enforcing "terms of its employment agreements that protect the bank from the misuse of proprietary information."
Agrawal had been accused of stealing proprietary code used to help buy and sell securities in 2009, as he was in talks to take a job at the New York hedge fund Tower Research Capital.
He was arrested in April 2010 at his New Jersey home, convicted by a Manhattan jury seven months later, and sentenced to three years in prison. Agrawal was set free last November, federal records show, having been in custody since his arrest.
In his appeal, Agrawal said SocGen's code had been "included in" the bank's trading systems, and was thus not "produced for" or "placed in" interstate commerce as required under the EEA.
He also said the code was intangible property, and not "goods, wares or merchandise" as required under the NSPA.
But Raggi wrote that jurors were asked to convict Agrawal on the basis that securities traded on SocGen's system, not the system itself, were the products placed in interstate commerce.
She said this was a "more obvious, convincing - and legally sufficient - theory" to support a conviction under the EEA.
Raggi also said Agrawal's activity violated the NSPA because he had printed the code in SocGen's office on thousands of sheets of paper, using the French bank's equipment.
"Had Agrawal stolen the code in intangible form, as the defendant in Aleynikov had done, and only later copied it onto paper or some other tangible medium, that would not be enough to transform the intangible property into a stolen good so as to state an NSPA offense," she wrote.
Circuit Judge Gerard Lynch joined Raggi's opinion.
The third judge on the panel, Rosemary Pooler, dissented from the EEA discussion, saying the majority opinion "directly conflicts" with the Aleynikov ruling, which she said the subsequent Congressional action did not disturb.
Aleynikov had served 11 months of an 8-year prison term before another 2nd Circuit panel - which included Pooler - in February 2012 threw out his federal conviction.
Chief Judge Dennis Jacobs wrote in the Aleynikov case that the court could not "stretch or update statutory words of plain and ordinary meaning in order to better accommodate the digital age."
Last August, however, a non-federal prosecutor, Manhattan District Attorney Cyrus Vance, brought criminal charges accusing Aleynikov of violating New York state law by taking Goldman's code. Aleynikov is trying to have that case dismissed.
The case is Agrawal v. U.S., 2nd U.S. Circuit Court of Appeals, No. 11-1074.