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Sergey Update: Goldman Motion To Quash Subpoena Denied
Matthew Friedrich unable to come thru in the clutch.
NEW YORK, Aug 10 (Reuters) - A U.S. judge on Monday denied
a motion by Goldman Sachs Group Inc (GS.N) to quash a request
for personnel information on a former computer programmer
accused of stealing trade secrets from the firm.
Judge Paul Crotty in Manhattan federal court ordered the
firm to provide the programmer's lawyer with documents from the
personnel file of Sergey Aleynikov, who faces criminal charges
of stealing Goldman code used in trading.
The lawyer subpoenaed Goldman for the file last week and
the firm submitted a motion to quash the request.
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Just because the motion to quash was denied, don't get your hopes up about actually seeing any information produced in discovery. It is tough to deny discovery. It is a lot easier to get a court to restrict disclosure of the information disclosed.
True. But expect to see much vicarious jubilation for Sergey's victory, in an "enemy of my enemy" kind of way ...
properly analyzed.
In response to Kool Aid- Then why prey tell attempt to quash access to something considered to be a basic right to possess?
Ruh Roh !!!
It's standard fare... the lawyers are working on a retainer and effectively get paid by the pound of paper. Strategically, this is the first line of defense, followed by, as Koolaid said, further motions/objections to limit and compartmentalize discovered information/documents (e.g. "confidentiality" or "privilege").
I can also say that big corporations such as GS are going to have a lawyer present at virtually every step along the way. When they start taking depositions, they'll carve out all the real meat because they'll claim the information requested is privileged communication with an attorney. (This is what's happening in an unrelated lawsuit I'm currently involved with). This can be had for a measly $100k/year for in-house counsel... just have them sit there every time you open your mouth and they can "discuss" things with your cohorts via conference call, etc. So long as it stays proprietary/within company employees, it may be considered privileged communication...
The real burden is on the Judge to grow a pair. Either you want to find out or you don't... and in all likelihood, the judge's decision won't be overturned on appeal given the standard for doing so is typically "abuse of discretion," which in practical terms is an impossible standard to overcome.
"Just because the motion to quash was denied, don't get your hopes up about actually seeing any information produced in discovery. It is tough to deny discovery. It is a lot easier to get a court to restrict disclosure of the information disclosed."
Just in case you were looking for something even more cynical than the comment above, what makes you think that it even matters what the Court orders Goldman to disclose? If they have documents/e-mails/etc. that implicate them in criminal activity, they won't turn them over. They will have shredded them a long time ago.
The only way to get them will be to have a serious criminal investigator subpoena all their books, computers, records, etc., and prove that they destroyed evidence. That's what it will take.
No, fraud generally can't be detected when collusion is present. What needs to happen is an insider decides to start up a qui tam/federal false claim act suit and roll with his reward/cut and a shit ton of documents/recordings. In other words, we wouldn't have ever known anything unless Sergei broke out on his own. Likewise, we'll never get any documents unless someone gets them out of the corporation and into safe hands (and if no hands are safe, then a judgment proof defendant with internet hosting capability). Might even stoop so low as to hire some top notch hackers and give them a blank check and a couple pallets of monster energy drink and tombstone pizzas (they can hire the $5k hookers and get some cocaine).
That would most likely be considered (criminal) contempt by the court. Neither judge nor jury would be likely to appreciate a non-cooparting corporate plaintiff in such a case.
If they can prove it.
I would love to see a story that actualy has an adverse impact on Godlamn's stock price. A 15% haircut on a bad trade or something. Or an investogation. OSmethign that will make then squirm.
thanks for the tip
The subpoena was for his personnel file? Don't expect any trade secrets in there... maybe a note on how he takes too long for lunch every other Friday, but that's about as interesting as those get.
(Pasting from another thread:)
Perhaps Sergey's personnel file will confirm (1) what individual hired him, (2) who he works with [via peer assessments], (3) COMPLAINTS he may have made as to concerns regarding the legality of the code he was writing, and (4) details on his duties [thus revealing what it was he was coding].
Most important, I think, is that people often have a copy of various things that go into their personnel file. They may have copies of the letters they wrote; copies of the tasks/duties. Etc. So when things are mysteriously missing from their personnel file, say because they were damning, the employee may be able to convince a fact-finder of the destruction of evidence ..
Of course, all speculation...
If Sergey has any brains, he would've had this information (appraisals et. al) with him already. He is probably testing whether Goldman is going to shred any incriminating evidence (if there is any) in the process. Compare notes and then wham-bam thank you mam !
... oh shit, I just gave it away...
I highly doubt he had access to his personell file. The GS lawyers have undoubtedly gone over it carefully but you'd be surprised what gets missed.
In any case, the trading records of the firm is likely where this will fought.
Typically, In quick response to questions a firm lies.
After reviewing the firms lies the broker takes the statements, which this kid must have, and proves how, where and maybe why they are lying from there own books.
It will be hard to refute in front of a criminal judge. Had this stayed under the controlling regulator GS could have lied until the cows come home. Now, they could be fried.
This story still has nuclear potential.
Of all the documents most easily and often altered, missing or road blocked over "privacy" personnel records top the list. I am willing to wager there will be a forthcoming request for the "working" records of key management & supervisory personnel that are kept in a separate state from the official records for consistency in reporting and production.
Do your dance
Do your dance for me mama
Come on baby tell me what's the word
Quite possibly that was the 'shot across the bow'... and since he has access to his own personnel file without a subpoena... Goldman had better hope that they have treated all employees in a like fashion over the years with this type of infraction... or get the popcorn ready for the civil suits
Racked and stacked..
Especially with standards for associate and full partnerships... THE carrot at GS.
Too bad GS shredded all that last month. And burned the pieces.
Since the fall, Goldman probably has an official document retention policy of about three days. Better yet, don't create any documents.
What about Sarbanes Oxley, isn't GS required by law to keep such stuff?
Could it be that Sergey is cooperating in a criminal probe against GS. Isn't front running actually insider trading? I'm just joking.
Just one more remix of the old Kenneth Dahl storyline from Watergate... "I would have told them if they asked"....
Nothing has changed at DOJ since then with the exception that there were many more folks at the agency then that were loyal to the institution of Justice and its dynamic role in our form of government than there are today.
If Goldman Sachs does it, then that means it's not illegal...
can Obama be impeached? I will say let him cross the limit and let him do whatever he wants.....Just grab his balls when he makes any mistake and take him down.
GS FED and Fiat money will go down when there is a massive event causing loss of life and property across the world and beyond human control.
No. No one shreds documents. No lawyer will do that. Their counsel will tell them not to. It's guaranteed obstruction of justice prosecution, and it's a felony. This guy's counsel is not trying to take GS down or reveal vast conspiracies. His counsel's job is to win his case and get the guy declared not guilty. He's likely in the process of doing two things: 1) Getting data to show GS had malicious intent towards him and that influenced their contacting authorities and pressing charges, to present to a jury and 2) Avoid there ever being a jury by annoying and running up GS's costs and bother to the point where they refuse to continue pressing charges. Now that doesn't guarantee that DOJ will not continue, but it would set the stage for a plea bargain that keeps him out of jail.
>2) Avoid there ever being a jury by annoying and running up GS's costs and bother to the point where they refuse to continue pressing charges. Now that doesn't guarantee that DOJ will not continue, but it would set the stage for a plea bargain that keeps him out of jail.<
Is this a feasible strategy? I would think that Goldman can afford to spend a lot more on lawyers than this guy, no?
"No. No one shreds documents. No lawyer will do that."
HAHAHAHA...I'm sorry, but we encounter that kind of shit even at the state level. You're correct that it's not the common practice, but it's certainly not unheard of.
Just last year, we had a case where the police obtained a search warrant for a defense lawyer's office (for info on a client, not the lawyer, long story), but we were on good terms with the lawyer and gave him a heads up about the warrant. As soon as he got our heads up, he immediately emailed his secretary, told her the police were on their way, and gave her explicit instructions on how to hide all of the evidence that the police were going to be looking for.
Unfortunately for him, his secretary accidentally copied the District Attorney's Office on the entire email exchange. Even our interns got it. End result: We recovered all of the incriminating evidence within hours from the lawyer's houseboat in the middle of Lake L*****. Luckily for him, he was close friends with the D.A., and the D.A. negotiated for him to get off with just a public reprimand from the Bar. But it makes you wonder, how much do they hide and/or destroy that we never even know about?
I hate to rain on your parade #32134, but:
“Regulators today announced that they have fined five brokerage firms a combined $8.25 million for failing to adhere to record-keeping requirements. The fines were levied by the SEC and self-regulatory bodies NYSE and NASD.
Deutsche Bank Securities, Goldman, Sachs, Morgan Stanley, U.S. Bancorp Piper Jaffray and Salomon Smith Barney consented to the fine without admitting or denying the allegations. Each firm will pay a $1.65 million penalty to the U.S. Treasury.
The firms are charged with failing to keep and maintain records in accordance with regulations set forth in the Securities Exchange Act of 1934.”
http://registeredrep.com/news/finance_data_overloadfive_firms/
“Merrill Lynch agreed Monday to pay an SEC fine of $2.5 million to settle charges that it had impeded a government investigation into its business practices by dragging its feet on turning over email records.
Merrill, the nation’s largest brokerage outfit, failed to produce in a timely fashion emails requested by the commission from October 2003 to February 2005, SEC officials said. In addition, the SEC cited Merrill’s inadequate policies and procedures for retaining and providing electronic documents. These transgressions were deemed violations of the record-keeping requirements under the Securities Exchange Act of 1934.”
http://registeredrep.com/news/sec-fines-merrill/
Banc of America Securities fined $10 million by SEC for “misleading regulators and stalling on producing evidence in an investigation of improper trading by employees at its securities brokerage.”
According to the SEC complaint, Banc of America Securities LLC and its lawyers simply did not turn over documents for months at a time, said some were ''missing" when they weren't, and ''engaged in dilatory tactics that delayed the investigation."
In one series of events, the firm complained it would be too much work to produce certain archived e-mails, when the SEC alleged that the company already recovered some of them for its own defense, and then deleted the e-mail exchanges from the firm's computer system.
Moreover, other documents sought by the SEC were destroyed one week after regulators asked the company to produce them. The securities firm told investigators the destruction of those documents was ''inadvertent."
NASD Charges Morgan Stanley DW with Repeatedly Failing to Provide Emails to Arbitration Claimants and Regulators."
“Morgan falsely represented that its emails had been destroyed in the September 11 Attack - it made that representation, and then found that the emails did in fact exist, on backup tapes and on individual computers. The NASD also alleges that Morgan Stanley later destroyed many of the emails it did possess, by overwriting backup tapes that had been used to restore the emails to the firm’s system and by allowing users of the firm’s email system to permanently delete the emails over an extended period of time. As a result, the complaint alleges, that between September 2001 and March 2005, millions of the emails were destroyed.”
http://seclaw.blogspot.com/2006/12/more-morgan-email-problems.html
“New York Attorney General Andrew Cuomo on Friday said he is prepared to charge Citigroup Inc. with fraudulent sales of auction-rate securities and with the destruction of key documents.
In a letter to Citigroup's counsel, Cuomo said that the bank destroyed documents and tapes that were under subpoena during a five-month investigation by his office. He said the bank "initially failed to notify the New York Attorney General's Office about the destruction of the tapes even though Citigroup learned in mid-June that recordings of its auction rate desk had been destroyed."
Read more: http://www.sfgate.com/cgi-bin/article.cgi?f=/n/a/2008/08/01/financial/f0...
“In Bermuda last Friday, a lawyer for American International Group Inc. Chairman Maurice "Hank" Greenberg carted boxes of documents out of an AIG office and into a van, according to people familiar with the situation.
The next day, lawyers hired by the big insurer to handle a regulatory probe discovered certain records were missing, these people say. Then another jolt: They also learned that an AIG employee had destroyed some computer records and tape recordings of business meetings. “
http://online.wsj.com/article/SB111230837636994784-search.html?collectio...
JP Morgan was fined $2.1 million by the Securities and Exchange Commission, the New York Stock Exchange and National Association of Securities Dealers (NASD) over E-mail record keeping violations.
All three regulators had instigated actions against JP Morgan Securities and investigated alleged conflicts of interest and undue influence of investment banking interests on securities research.
According to the SEC, this led to the discovery that JP Morgan Securities' E-mail record keeping was improper. According to Reuters, the SEC found that some back-up tapes were suspiciously damaged, missing, and/or not retained.
http://arkfeld.blogs.com/ede/2005/02/jp_morgan_pays_.html
Extremely talented programmer being paid less than the alleged puppy killer's maid so he decided to get a better job working for the competition.
delay tactics. this discovery will yield him nothing but time, perhaps, time with which to implement the goldman code enough and flesh it out to make it evidence against goldman that he will blackmail them with , lest he send it to the 'authorities' at least, to those authorities who goldman hasn't contributed campaign money too.
You can never leave The FIRM...
Let's see here... We got our standard HFT Vampire squid money sucking program... Annnnnd...
It's gone.
Goldman made another huge mistake in hiring the high profile law firm to quash the defense subpoena in this simple, minor matter. Now the AUSA has been put on notice on how Goldman intends for this prosecution to play out. Who from Goldman is going to testify that what the defendant is alleged to have stolen actually belongs to Goldman. who from Goldman will testify as to the actual mechanics of the program, it's intent, it's value, it's prior uses? What about their personnel records, emails etc.? What about the speed of the complaint, who are the outside parties, how did they get involved, who called who? Was Justice involved, Treasury, a Senator?
Expect Grand Jury subpoenas from the AUSA (because now he is pissed at Goldman), maybe a few "Queen for a day" Q&As. Give them hell. make their life miserable and don't back down Sergey!
Yes. Agreed. Once they filed a criminal complaint they lost control of the matter
and, as I stated above, it could blow up in their face. Arrogance.
my newest bookmarked finance website...http://www...
On the 'they did not treated others the same way' thought, there were a group of developers that came to JPMC from GS a few years ago. Talking to people that were there at the time, the rumor was that they took their work from GS, put it on a CD, and then went down to Park Ave with it.
The feeling was that the team simply couldn't have produced what they did in such a short amount of time. Especially since it seemed there was a _huge_ amount of code that was written in a short amount of time, and then things slowed to a crawl, and it ended up going live (with only a fraction of the promised features) around 2 years behind schedule.
Having seen the system after all that was alleged to have happened, GS would have been smart to feign outrage and let JPMC keep it as a form of competitive advantage (for GS).
Goldman has had to lawyer-up big time. They fuked this up by misjudging how this would snowball out of control. If there is a trial it won't be about Sergey; it will be Goldman that's on trial.
I expect a settlement. Charges dropped in exchange for Sergey agreeing not to sue.
not a lawyer here, but I don't think the us atty can drop criminal charges with a condition that the charged individual cannot pursue a civil action. certainly i stand to be corrected.
YOU...are correct Sir.
The more I think about this case the more it becomes clear to me the extent to which inroads have been made into employee rights in recent times. Much of a worker's skills in the 'knowledge economy' are no different in principle from the toolbox of the craftsman of the age of the Real Economy. What next; leave your persona in your desk drawer as you leave?
Time for some academic to start looking at the kind of thing people have to sign when hiring on these days. The new indentured labor? Like we aren't owned enough already.
It is a stalling tactic. They do it all the time. Now it will take Goldman 12 months to turn the file over. Next they will start asking everyone involved to prove they are married. After that, interrogatories are created. Then discovery, wherein each side will take turns having an illness on the day of the deposition. In late 2011, the code will be declared illegal.
Sorry man. Not in this criminal case.
If Sergey stole Goldie's secret sauce, why did profitable flash trades sky rocket after he left?
Are Ali Baba's thieves hiding behind the pretty girl's petty coats?
40427401NH4NO3
can Obama be impeached? I will say let him cross the limit and let him do whatever he wants.....Just grab his balls when he makes any mistake and take him down.
GS FED and Fiat money will go down when there is a massive event causing loss of life and property across the world and beyond human control.
Click the ads, support Zero Hedge servers please.
it's all bullshit, nothing will come of it
2 years overdue and with a fraction of the promised features & over budget is par for the course at JPMC
Athena was the name of the system at JPMC that was by the ex GS team. I heard they turned up and just recompiled the code.
If GS got rid of his personnel records ,they won't be able to prove he was working as a programmer for them---what is code and how do you steal something when you don't know what it is....
If GS got rid of his personnel records ,they won't be able to prove he was working as a programmer for them---what is code and how do you steal something when you don't know what it is....
..Sergey Aleynikov..IS A DEAD MAN !!