Monday, 20 February 2017
Last updated 2 days ago
Oct 24 2013 | 9:38am ET
Goldman Sachs will have to cover the legal bills of a former computer programmer it is widely seen as wanting to put behind bars.
A federal judge this week ruled that Sergey Aleynikov was an officer of the bank when he allegedly stole the firm's high-frequency trading code with plans to deliver it to his new employers, a controversial firm founded by several former Citadel Investment Group traders.
Goldman had argued that Aleynikov was merely a "midlevel computer programmer with no managerial responsibilities." But U.S. District Judge Kevin McNulty ruled that, as a vice president at the bank, Aleynikov was entitled to have his legal bill paid.
McNulty did acknowledge that, as something of a "courtesy title" on Wall Street, whether Aleynikov's vice presidency made him an officer was a "close question." But he ruled that "it is uncontroversial that a 'vice president,' at least in the corporate context, is a kind of officer."
The judge ordered Goldman to advance Aleynikov the money to pay the lawyers defending him against New York state charges that could put him in jail for four years. It is the second time Aleynikov has faced trial on the allegations; he was convicted in 2010 in federal court and sentenced to eight years in prison, only to have it thrown out on appeal.
Aleynikov's lawyers have put his total legal bills at $2.3 million.
"As a result of these two misguided prosecutions, Sergey Aleynikov lost his marriage, his home, his job, his life savings, his good name and, for a full year, his freedom," Aleynikov's lawyer, Kevin Marino, said. "That the party which provoked all that misfortune must now begin to underwrite it is good news indeed."
McNulty did say that Goldman could seek to recoup the legal fees if Aleynikov is convicted again. And he offered some perhaps less-than-assuaging words, as well.
"Goldman may understandably find the result galling; it believes that Aleynikov has stolen its property. If there is any comfort, it may lie in the fact that Goldman has also been indemnified and advanced fees in cases where the conduct was alleged to be unlawful and, in the broader sense, no less harmful to Goldman."