Emily Lambert, 07.28.10, 02:36 PM EDT -- Computer jockeys setting up own shops in bids to make millions.
Pity the programmers toiling away at Wall Street's secretive high-frequency trading shops--places like Goldman Sachs ( GS - news - people ), Citadel and Getco. They wrote algorithms that take advantage of fleeting trading opportunities and bring in up to $100,000 a day. In return, they received a fraction of the pay doled out to their bosses.
Now some programmers feel used and are instigating a revolt.
They are doing so by striking out on their own or forming profit-sharing arrangements. Jeffrey Gomberg, 32, worked for a trading firm that paid him a low-six-figure income after four years on the job. His trader colleagues, by contrast, made millions manipulating the algorithms he'd written.
Last year Gomberg and a fellow programmer quit their jobs and cut a deal with HTG Capital Partners of Chicago, whose programmers typically trade on regulated futures exchanges. HTG supplies office space, technology and access to exchanges. Gomberg keeps 40% to 80% of net profits, with the percentage rising as his profits do. More importantly, says Gomberg, the programmers retain ownership of the code they write.
“We designed this deal so we wouldn't lose intellectual property,” he says. “If it doesn't work out, we can go somewhere else and take all the software [that we developed]. That's really the key.”
HTG's owner, Christopher Hehmeyer, says he gets three to five inquiries a week from high-frequency programmers looking for better gigs. Many callers are immigrants or were hired out of college for $80,000 to $150,000 a year. If a programmer brings money with him, and puts up at least $250,000 to become an HTG partner, Hehmeyer hikes his percentage of the take.