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NY Federal Reserve Bank seeks to dismiss lawsuit by former employee

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January 3
11:18 PM 2014

The New York Federal Reserve Bank moved to dismiss a lawsuit filed against it by a former employee who alleged that she was removed from her post for her refusal to change a critical examination of Goldman Sachs Group Inc, Reuters reported.

Carmen Segarra, the former employee said that after a seven-month review of the legal and compliance divisions of Goldman, she found that the lender did not have rules to avoid conflicts of interest which is required by regulation.

However, New York Fed lawyers said in a 30-page court document that some of Segarra's claims  were not plausible because of the numerous contradictions found in her pleading. The report quoted the document as saying, "Most glaringly, the allegation that Goldman Sachs did not have any conflict of interest policy is belied by plaintiff's own exhibits, which show that the 'nonexistent' policies were, in fact, available on Goldman Sachs's public website." Lawyers filed the motion in a federal court in the Southern District of New York.

Segarra's lawsuit claimed that the Legal Compliance and Risk team of the New York Fed voted to downgrade the annual rating of Goldman related to its procedures and policies because of her findings. She claimed that the Michael Silva and Michael Koh, the two New York Fed officials who oversaw Goldman were concerned that a downgrade would be detrimental to the business of the lender. Koh and Silva and Segarra's former supervisor Johnathon Kim were named as the defendants of her lawsuit, Reuters reported.

Segarra worked in the legal and compliance divisions of Goldman from October 2011 to May 2012 and also evaluated transactions concerning Solyndra, Capmark and the El Paso and Kinder Morgan Inc merger. In her lawsuit, Segarra alleged that she was fired by Kim, Silva and Koh after weeks of disputes and pressure to alter her examination findings, the report said.

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