January 31, 2023

Two ex-Goldman Sachs employees suffer courtroom defeats

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Lloyd-C.-Blankfein-Article-201409031558From David Bario, The Litigation Daily

Armed with lawyers from Boies, Schiller & Flexner and O’Melveny & Myers, Goldman Sachs & Co. scored back-to-back victories on Wednesday against former employees who burned their bridges with the investment banking behemoth in spectacular ways.

The first victory came in Goldman’s indemnification battle with Sergey Aleynikov, the senior programmer who helped Goldman build an aggressive high-frequency trading platform before his 2009 arrest for alleged corporate espionage. The U.S. Court of Appeals for the Third Circuit reversed an October 2013 decision ordering Goldman to front funds for Aleynikov to defend himself against criminal charges by the Manhattan district attorney.

Siding with Goldman counsel Christopher Duffy of Boies Schiller, the Third Circuit panel ruled 2-1 that Aleynikov, whose title at Goldman was “vice president,” hadn’t shown he was entitled to the fee advancement as an “officer” under the bank’s bylaws. The appeals court remanded the case for further proceedings on Aleynikov’s claims.

Our affiliate New Jersey Law Journal has a full report on the decision.

Federal prosecutors charged Aleynikov in 2009 with stealing Goldman’s proprietary source code when he left for a new trading firm. The government won a jury conviction the following year, but the U.S. Court of Appeals for the Second Circuit reversed the conviction in February 2012, concluding that Aleynikov violated neither the Economic Espionage Act nor the National Stolen Property Act. Six months later, the Manhattan D.A. brought new state law criminal charges. Aleynikov is represented by Kevin Marino of Marino, Tortorella & Boyle.

Goldman Sachs’ second win on Wednesday came in a very different sort of dustup with another former employee who helped the bank fill its coffers before leaving for a new Wall Street firm. The case involves Deeb Salem, whose savvy helped earn Goldman billions—and himself a reported $35 million—betting against the mortgage market in the run-up to the financial crisis.

Salem accused Goldman in a Financial Industry Regulatory Authority arbitration of stiffing him on his bonuses from 2010 to 2012, and demanded an additional $15 million in bonus payments and more than $6 million in deferred compensation. When the FINRA panel ruled against him in March, Salem took the fight to state court in Manhattan, seeking to overturn the panel’s decision.

According to Reuters, New York State Supreme Court Justice Eileen Bransten confirmed the arbitrators’ ruling from the bench during a hearing on Wednesday. The decision is a win for Goldman counsel Andrew Frackman of O’Melveny & Myers. Salem’s lawyer, Jonathan Sack of Sack & Sack, told Reuters he plans to appeal.

IMAGE: Goldman Sachs CEO Lloyd Blankfein in 2010. Photo by Diego M. Radzinschi

For more on this story go to: http://www.litigationdaily.com/id=1202668840628/Two-ExGoldman-Sachs-Employees-Suffer-Courtroom-Defeats#ixzz3CMKK0L6k


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