NEW YORK: A New York state judge on Wednesday ruled against a former Goldman Sachs Group Inc trader who wanted the court to toss an arbitration panel's decision in his pay dispute against the firm.
New York State Supreme Court Justice Eileen Bransten, who ruled from the bench in her Manhattan courtroom, confirmed a March decision by a Financial Industry Regulatory Authority (FINRA) arbitration panel to dismiss a case filed by the ex-trader, Deeb Salem. She also denied a request by Salem's lawyer to throw out the arbitration ruling.
Salem's New York-based lawyer, Jonathan Sack, said he plans to appeal. A Goldman spokeswoman could not be immediately reached for comment.
Deeb Salem, known for his role in shorting the US housing market in the run-up to the financial crisis, had alleged in court papers that FINRA arbitrators improperly dismissed his case at Goldman's request in March, before he fully presented his evidence and witnesses.
Salem filed the court case in June after a recording revealed that an arbitrator described his case as "bullshit," according to court documents.
Salem, who worked on Goldman's mortgage trading desk, had been seeking more than $21 million in compensation as well as legal costs and other penalties, according to the FINRA panel ruling. Salem wanted higher bonuses for 2010 and 2011, and a bonus and deferred compensation that he did not receive for 2012.
He left the Wall Street bank that year to take a job at GoldenTree Asset Management. He gained some notoriety after the financial crisis because a US Senate panel included his own performance review for 2007.
In the review, Salem detailed what he described as Goldman's plan to put a "short squeeze" on the mortgage market. Sack, Salem's lawyer, told Bransten during a hearing on Wednesday that arbitrators did not give him the chance to call witnesses whom he wanted to testify in the arbitration.
But Sack "failed to show evidence that the material excluded was pertinent to this case," Bransten said.
The FINRA arbitration panel accepted Salem's testimony during the arbitration and "thereafter found there was no reason to go forward," Bransten said.
Bransten also ordered that filings in the case be redacted. She told Sack that it wasn't proper for him to have included the arbitration transcript in the public record. Goldman submitted a motion in June to seal the filings.
FINRA, Wall Street's industry-funded watchdog, also runs the arbitration forum where investors and licensed brokerage employees must typically resolve their legal disputes against brokerages.
Arbitration rulings are typically binding. However, courts may overturn them in limited circumstances, such as when an arbitrator is biased. Sack and Salem failed to meet the "heavy burden" required to overturn an arbitration ruling, the judge said.
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