Goldman need not advance ex-programmer's legal fees - U.S. judge

A U.S. federal judge on Friday said computer programmer Sergey Aleynikov is not entitled to have former employer Goldman Sachs Group Inc cover his legal fees to defend against criminal charges that he stole secret code from the bank's computers.

U.S. District Judge Kevin McNulty in Newark, New Jersey rejected Aleynikov's argument that the strong public policy of Delaware, where Goldman is incorporated, justified advancing the fees, which according to court papers exceed $3 million.

McNulty ruled four months after a divided three-judge panel of the 3rd U.S. Circuit Court of Appeals reversed his October 2013 order that Goldman advance at least some of the fees.

The panel said Goldman's bylaws were ambiguous as to whether Aleynikov, who had been a vice president at Goldman, qualified as an "officer" entitled to the fees, and directed McNulty to decide the definition of an officer.

In his decision on Friday, McNulty said he still lacked enough information to make that determination, and that the 3rd Circuit rejected the idea that Delaware public policy offered a "sufficient independent basis" for a fee advancement.

"The public policy issue that Aleynikov raises now was at the very heart of the disagreement between the majority and the dissent," McNulty said. "And the dissenting view, by definition, did not prevail."

Aleynikov's lawyer, Kevin Marino, said in an email: "We are disappointed in the court's decision but remain confident that Goldman Sachs will ultimately be forced to indemnify Mr. Aleynikov." He has asked the 3rd Circuit to reverse the panel decision.

A Goldman spokesman was unavailable for immediate comment.

Aleynikov was arrested in July 2009 for allegedly stealing Goldman code as he prepared to join a Chicago high frequency trading startup.

He was later convicted under federal law and spent 11 months in prison, only to have another federal appeals court void his conviction in February 2012.

Six months later, however, Manhattan District Attorney Cyrus Vance Jr unexpectedly charged Aleynikov with state crimes based on the same alleged misconduct. That case remains pending.

During the proceedings, it was shown that over six years, Goldman had advanced legal fees for 51 out of 53 employees considered for eligibility at its Goldman Sachs & Co unit. Aleynikov was one of the two who got nothing.

The case is Aleynikov v. Goldman Sachs Group Inc, U.S. District Court, District of New Jersey, No. 12-05994.

Tags

U.S., Goldman Sachs Group Inc, 3rd U.S. Circuit Court of Appeals

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