Exclusive Online Only ContentUBS Charges 3 Ex-Employees With Code Theft
July 14, 2009
Goldman Sachs is not the only Wall Street firm taking an ex-employee to court with the charge of theft of trade secrets in the form of valuable, proprietary trading code.
Swiss bank UBS AG confirmed Monday that it filed papers in March charging three ex-employees with “misappropriation of trade secrets.” The “misappropriation” included 25,000 lines of source code used in UBS’s “trade secret algorithmic trading programs,” according to documents submitted with the New York State Supreme Court.
The bank is charging three former employees in the firm’s algorithmic trading group of having “collectively coordinated and planned together” to move to new jobs at New York-based Jefferies & Company while still technically in the employee of UBS, taking with them UBS trade secrets, breaching their employment contracts and fiduciary duties and resulting in unfair competition.
The three charged are: Jatin Suryawanshi, the former managing director and head of the unit; Partha Sarkar, an executive director and Sanjay Girdhar, a group director. In June, Jefferies publicly announced that Saryawanshi had joined the firm as a managing director and head of its global quantitative strategies trading unit while Sarkar and Girdhar had joined the unit as senior vice presidents.
Lance Gotko, a lawyer with Friedman Kaplan Seiler & Adelman, a law firm representing the defendants, stated on Tuesday that the charges are wrong and false.
“My clients flatly deny ever taking any source code and using it for any purpose other than for UBS,” Gotko said, adding that he has repeatedly tried to settle the matter in a way that would give UBS comfort and that the firm’s source code is secure. “UBS has twice pulled out of settlement talks and is hell bent on torturing my clients rather than finding out if the source code is being used,” Gotko said.
More than a week ago, the lawyer said he offered to have an independent computer forensics expert visit Jefferies to examine the two different source codes and determine if there has been any copying. “UBS has been silent about that proposal,” Gotko said. “Rather than finding out about any wrong doing, UBS just seems to be intent on continuing the litigation and torturing my clients,” he said.
In the court papers filed, UBS states that the basis for competition in the algorithmic trading industry are the computer programs used to implement investment strategies and that the source codes for these programs are “closely-guarded trade secrets.”
“UBS will suffer irreparable harm if Jefferies obtains the source code and presentations taken.….Such materials constitute much of what Jefferies would need to copy UBS algorithmic trading program or to build a program based on UBS program in order to compete with UBS,” says the complaint.
