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Goldman Sachs Requests Arbitration of Whistleblower Retaliation Claims

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  • Posted on: Sep 26 2018

Goldman Sachs Group, Inc. (“Goldman Sachs” or the “Company”) is requesting that wrongful termination claims brought by a former executive alleging whistleblower retaliation by the Company should be heard in arbitration or dismissed all together.

In early August, former Goldman Sachs executive, Chris Rollins (“Rollins”), brought suit against the Company, asserting that its leaders wrongfully blamed him for failures with the Company’s anti-money laundering procedures, ruined his reputation, and fired him in retaliation after 16 years of service. The case arose in connection with a series of transactions involving an unnamed financier.  Rollins is seeking $50 million in damages.

Gold Claims Employee Fired for Unauthorized Trading

The complaint names Jim Esposito (“Esposito”), now-co-head of Goldman’s securities division, as a defendant. It also identifies bankers Michael Daffey (“Daffey”) and John Storey (“Storey”), among other company leaders, as participants in the subject matter of the lawsuit. Daffey and Storey are among the most senior members of the Company’s equities business.

According to the complaint, beginning in 2015, Daffey and Storey met with the financier for the purpose of finding ways to bring him on as a client. Rollins alleges that the financier told them that he had $1 billion to invest.

Goldman Sachs maintains that Rollins was fired for executing certain trades, which involved a previously restricted party, without first obtaining authorization. However, according to the complaint, between September 2015 and August 2016, Daffey, Storey, and former-Vice Chairman Michael Sherwood, “used their influence within the firm” to arrange for the transactions, working around the firm’s compliance controls.

Pressured to “Confess”

After the series of issues occurred, Rollins contends that the Company began pressuring him to confess to violating compliance restrictions related to the financier, though it never identified any of the restrictions. He says that Daffey and Storey told him that they had arranged for Esposito to be the decision-maker, and the “friendly arbitrator.” Finally, the complaint alleges that Daffey told Rollins that if he “didn’t fight the charges, and was ‘contrite,’ he’d receive no more than a slap on the wrist.” Rollins maintains that he didn’t do anything wrong.

A Previous Agreement to Arbitration

Goldman Sachs argues that when Rollins became a managing director in January 2011, he agreed to arbitrate all disputes with the Company.  Goldman Sachs has asked U.S. District Judge Edgardo Ramos to stay the lawsuit while the parties arbitrate Rollins’ claims, or dismiss the suit completely. Goldman Sachs contends that the lawsuit is a “misplaced attempt” to involve U.S. courts in a matter based upon events outside of the country.

In February 2017, after an internal investigation had found that Rollins had engaged in “misconduct warranting termination,” he was discharged. The Company went on to contend that only after an investigation of his potential misconduct (conducted in the United Kingdom) began, did he report concerns with the Company that he had been a whistleblower.

Goldman spokesman, Michael DuVally, said that “the suit is without merit, and [Goldman] intend[s] to vigorously contest it.” The case is ongoing. See Rollins v. Goldman Sachs Group Inc., 18-cv-7162, U.S. District Court for the Southern District of New York (Manhattan).

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