It’s hard to say right now how much money, if any, anybody lost on this theft; it’s clear, however, that Mr. Aleynikov’s former employer Goldman Sachs (NYSE: GS) thought it serious enough that the customary intellectual property civil suit wouldn’t suffice to discourage potential imitators.

“Program trading” has meant many things over the last couple decades. It used to be simply “the simultaneous trading of a portfolio of stocks, as opposed to buying or selling just one stock at a time,” where “computers simply speed up the process.” When this description appeared, program trading accounted for about 10 percent of New York Stock Exchange volume.

But the concept has evolved, as have processing speeds, since the 1990s. This story is about “high-frequency trading.” The idea isn’t all that sophisticated: You want to retrieve and process market data values faster than anyone else.

If you find that a price is lower than you think it ought to be quicker than anyone else, you buy; you sell when you find that price is higher than you think it ought to be. There are plenty of ways to determine what prices ought to be, and it’s a never-ending race to be just a few microseconds faster than someone else’s calculations.

On July 4, Mr. Aleynikov was charged with stealing the proprietary software code that enabled Goldman Sachs “to engage in sophisticated high-speed and high-volume trades on various stock and commodities markets.”

A computer programmer, Mr. Aleynikov described his function on the social networking website LinkedIn as follows: “Lead development of a distributed real-time co-located high-frequency trading (HFT) platform. The main objective was to engineer a very low latency (microseconds) event-driven market data processing, strategy, and order submission engine.”

What makes this more than a run-of-the-mill intellectual property case is that, according to the New York Stock Exchange’s (NYSE) report for the week ended June 26, program trading accounted for 48.6 of total volume. And Goldman alone was responsible for 60 percent of all program trading volume, meaning this single player had a hand in 30 percent of all NYSE volume.

The Securities and Exchange Commission has endorsed program trading because it believes institutional money managers are “sophisticated” enough to trade against the machines without further regulation.

Proponents also argue that computer-driven program trading brings substantial additional liquidity into the market. It allows investors to get into and out of positions at prices which aren’t as likely to dislocate as they would in a less-liquid market, a clear market and therefore societal benefit.

However, in a statement announcing the charges against Mr. Aleynikov, Assistant US Attorney Joseph Facciponti said, “The bank [Goldman Sachs] has raised the possibility that there is a danger that somebody who knew how to use this program could use it to manipulate markets in unfair ways.”

Joe Saluzzi of Themis Trading, taking the next logical step from Mr. Facciponti’s use of the word “manipulate,” noted in a guest post to the financial blog zerohedge.com, “Our equity market is being controlled by machines that are nothing more than two bit, SOES bandits. They cloak themselves under the mantra of liquidity providers but they are really just locusts and are feeding off the equity market until it doesn’t suit them anymore. Once their profit margins are squeezed to almost zero, they are likely just to move on to a new market.”

The implication of Mr. Facciponti’s statement is that Goldman is allowed to manipulate the market in “fair” ways. Critics such as Mr. Saluzzi contend that program trading does not add liquidity and exacerbates intraday volatility.

Critics suggest the high-speed program trades “front run” order flow from retail and institutional investors, a practice that could explain the recent disconnect between underlying economic fundamentals and the technical support of equity markets.

The impact of high-frequency trading on intraday volatility can be profound. If you day-trade, the risk/reward profile that results from the existence of such programs is skewed to the risk side.

When a number of the big program-trading firms are weighting a particular stock in the same direction you don’t want to be on the opposite side of that trade. And if enough volume is concentrated in one big bank, such as Goldman Sachs, the opportunity for manipulation is increased.

Beyond a certain point, increases in execution speed only help those trying to manipulate the market, not those serving a legitimate purpose of speculation and liquidity. This is distorted volume. We’re not talking about bargained-for exchanges among competent decision-makers. These aren’t investors evaluating fundamentals.

A given day brings reams of economic data points over which dismal scientists and chief strategists could argue for hours and institutions and individuals can readjust portfolios. What Goldman Sachs’ black box does is try to find patterns in this noise–not for capital creation, but for millisecond-by-millisecond, fraction-of-a-penny-by-fraction-of-a-penny profits.

The bottom line: Don’t mistake “volume” for “liquidity” in this market. And focus on fundamentals.

David Dittman is managing editor of Personal Finance.