A case in arbitration against three former UBS employees accused of swiping algorithmic trading code has ended in favor of the three men and against their former employer.
As a result of a Financial Industry Regulatory Authority resolution, every claim UBS made against Jatin Suryawanshi, Partha Sarkar and Sanjay Girdhar was either denied or dropped. No damages, sanctions, injunctions or other forms of relief were awarded, according to a FINRA award dispute resolution filing on Tuesday. However, both parties were left with splitting administrative-related arbitration fees, the filing said.
Last March, UBS filed suit against Suryawanshi, Sarkar and Girdhar after the three moved to Jefferies & Co. earlier in the year. In its complaint, UBS charged the three with misappropriation of trade secrets–specifically, algorithmic code–and a list of other offenses. The three men denied that they took the code and said they were innocent of the charges.[
"We’re absolutely delighted to have this put behind them so that they, and Jefferies, can go forward," said Lance Gotko, an attorney at Friedman Kaplan Seiler & Adelman who represents the defendants.
UBS and its attorneys declined to speak to Traders Magazine about Tuesday’s FINRA decision.
In the belief that the three stole algorithmic source code, UBS sought, through a permanent injunction, to prevent Suryawanshi, Sarkar and Girdhar from using any of the algorithmic code they’d been accused of taking to benefit their new employer, Jefferies. FINRA denied the request on Dec. 30. The firm also sought damages for the code theft. After the FINRA arbitration panel denied the injunction, UBS dropped the claim.
At a hearing on Jan. 13, UBS dropped damage claims against Sarkar and Girdhar. They had been accused of starting employment at Jefferies in violation of their garden leave obligations with UBS. UBS also dropped its claim against Suryawanshi. The firm said he had wrongfully solicited Sarkar and Girdhar to leave UBS and go to Jefferies. FINRA on Tuesday also dismissed the UBS claim that Suryawanshi had breached his garden leave period.
The FINRA panel also denied two separate motions Suryawanshi, Sarkar and Girdhar made against UBS.
Two members of the three-person FINRA panel signed Tuesday’s award dispute resolution filing in concurrence. One signed in dissent.
The case had been filed with the New York State Supreme Court. Both sides elected to resolve the dispute through the FINRA arbitration panel. The panel’s decision and findings were final, Gotko said.
UBS sued Suryawanshi, Sarkar and Girdhar last March for misappropriation of trade secrets, breach of contract, breach of fiduciary duty, unfair competition and other wrongdoing.
Specifically, the UBS complaint alleged that Sarkar copied 25,000 lines of physical source code from UBS–roughly equal to one algorithm, or sections of several, according to sources. Sarkar allegedly emailed the code to his personal email account to develop or reproduce for later use, the complaint said. Suryawanshi, the complaint alleged, attempted to hide Sarkar’s actions by deleting internet history files from his own UBS computer.
