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Lawsuits/Arbitrations

Goldman Spared Legal Fees in Ex-Programmer’s Theft Case

January 23, 2017

[Photo:  Sergey Aleynikov with lawyer, by Kevin Dugan / NYPost]

 

Though he had a ‘VP’ title, he didn’t have managerial authority of a corporate officer.

 

Sergey Aleynikov, the former Goldman Sachs programmer who was cleared of charges he stole the investment firm’s computer-trading codes, lost his bid to force the bank to pay for his legal fees. The Delaware Supreme Court concluded Friday that Sergey Aleynikov, though he had a vice president’s title, wasn’t entitled to reimbursement from the bank because he didn’t have the managerial authority of a corporate officer.

 

The ruling means Aleynikov may be on the hook personally for more than $7 million in legal fees billed by his lawyers while fighting the code-theft charges and lawsuits against him by Goldman Sachs. While the Delaware court ruled against the programmer, his lawyer said the decision won’t stop efforts to use a suit in federal court in New Jersey to force Goldman Sachs to pick up the attorneys’ tab.

 

The Russian immigrant was arrested in 2009 after leaving Goldman Sachs to join Teza Technologies. Prosecutors accused him of uploading hundreds of thousands of lines of allegedly propriety code from the firm’s HFT system on his last day of work.

  • His federal theft conviction in December 2010 was overturned in 2012. 
  • In 2015, a judge threw out related state-court charges.
  • After being cleared, Aleynikov sued Goldman Sachs in New Jersey in 2012 over his defense lawyers’ fees.
  • The following year, a judge ordered Goldman Sachs to pay Aleynikov $2.3 million.
  • A federal appeals court in Philadelphia overturned that decision in 2014, ruling that ambiguity in Goldman Sachs’s bylaws must be decided under the law in Delaware.
  • In February 2015, Aleynikov sued Goldman Sachs in Delaware Chancery Court for more than $500,000 in fees tied to Goldman’s counterclaim.
  • Judge Travis Laster rejected Aleynikov’s claims in July 2016 because he couldn’t prove all junior executives qualified as officers under the bank’s bylaws.