Journalism in the Public Interest

Documents to Remain Open in Examiner’s Lawsuit Against Fed

A federal judge rejected the Federal Reserve Bank of New York’s plea to seal documents in a wrongful termination lawsuit filed by a former bank examiner who claims she was fired for doing her job.


The Federal Reserve Bank of New York. A federal judge rejected the bank's plea to seal documents in a wrongful termination lawsuit filed by a former bank examiner who claims she was fired for doing her job. (Spencer Platt/Getty Images)

A federal judge rejected the Federal Reserve Bank of New York’s plea to seal documents in a wrongful termination lawsuit filed by a former bank examiner who claims she was fired for doing her job.

U.S. District Judge Ronnie Abrams ruled today in the case by Carmen Segarra against the New York Fed and three employees. Much of the material the Fed hoped to keep off limits, including 67 paragraphs from Segarra’s complaint and multiple exhibits, can be found on ProPublica’s website and others.

“I am not convinced that anything will be accomplished to seal or redact a complaint that is publicly available,” said Abrams in the hearing held at the federal courthouse in lower Manhattan.

Segarra worked for the New York Fed for seven months before being fired in May of last year. She was assigned to examine Goldman Sachs and its conflict-of-interest policies, she said. Segarra said she determined that Goldman’s policies did not meet Fed requirements. Her lawsuit alleges that her bosses tried to convince her otherwise and that she was fired after refusing to change her findings.

Goldman says it has robust methods for managing conflicts of interest and has declined comment on Segarra.

At today’s hearing, New York Fed attorney David Gross accused Segarra of stealing confidential documents, including her own internal emails and meeting minutes. Were the court to allow them to remain public on its own electronic records system, called Pacer, it “would be helping this improper conduct,” Gross said.

Gross compared the New York Fed’s relationship with the financial institutions it supervises to attorney-client privilege. Should the institutions lose faith in the Fed’s ability to keep communications and documents secret, it could spell trouble, he said.

“If [the supervised banks] don’t think it will be confidential, they will be less willing to give that information, to the detriment of the financial system,” said Gross.

Although ruling against the Fed, Abrams asked Segarra and her attorney, Linda Stengle, not to reveal any more confidential supervisory information without first consulting with her. “This is not a gag order,” the judge said. “I am not telling plaintiff she cannot talk about her case.”

Linda Stengle said afterward she was pleased about the ruling but unhappy that there were constraints placed on her client. “It’s important that the public have access to the information” in support of Segarra’s case, she said.

A spokesperson for the New York Fed did not immediately respond to a request for comment.

Excellent job Jake! And the Oct 10th article is awesome! You’re the best. Keep at it! You and Carmen Segarra are angels in the fight to oust the corrupt wall-streeters at Goldman Suchs!

Well done people .

Good…. glad to see Goldman told no. Corporate pricks like them need alot more than this to start to get them in line, more like a 2x4 to their head and moreover wallet.
Such weasely bastards that their confidentiality could be violated, oh poor poor little rich bitch. What a line of BS !   
They’ve stolen enough and screwed over too many people…. Fuck ‘em.

Excellent!!!! Thank you Judge Abrams! I see a glimmer of hope in exposing the corrupt Fed!

How scummy and inappropriate of NY Fed attorney Gross to accuse Ms. Segarra of stealing her own notes related and documents related to her review of Goldman’s conflict of interest policies.  What a joke of an argument, especially after the information was already disclosed in the excellent Pro Publica article that discussed Ms. Segarra’s suit.  Cheers and thank-you to Judge Abrams for allowing the facts of just how incompetent the Fed is in supervising Goldman Sachs.  What the NY Fed is really afraid of is the disclosure of their own conflict of interest in their management’s efforts to stifle Ms. Segarra’s excellent examination findings.

The NY Fed is petrified that the Segarra suit is going to show that they are incapable of regulating powerful investment banks like Goldman Sachs.  Isn’t there a conflict of interest at the NY Fed since it’s current President and several other high ranking officers are former Goldman senior managers ?

Terry Lafargue

Oct. 16, 2013, 7:21 a.m.

Since Goldman Sachs amoung many others including our government was a key culpert in the destruction of the economy which was perhaps the largest financal crime ever portrayed in history of the world; it makes perfect since that they would oppose opening these documents to public inspection.

Our financial structure, the big banks, investment houses and the federal financial buracracy at the top is a perscription for disaster. The mamoth lobby effort capabilities makes it impossible to properly regulate protection.

We the people have the power to break this system up. I suggest that we all move our money to regional banks, community banks and credit unions. This step would create two positive results: 1. Bring back dollars to the community. 2. Break down the TO BIG TO FAIL MENTALITY.

The smaller banks would lend money and invest in local economies, thus jump starting the economy. The small banks do not have the mamoth lobby.

If the big banks continue to be the keeper of our money, we will continue to have problems. You can bet on it.

If we allow this current system to exist; will financial corruption and irresponability continue to exist. You can bet on it.


Excellent reporting on the lawsuit. I hope we really get to see the inside of the “Good Old Boy Network” between the Fed and Goldman’s. There was a suggestion in a COMMENT that we should move money to regional banks.  That sound like a great idea. However, the vast majority of the wealth is held by a few:  The richest 1% of American households earned as much last year as the bottom 60% put together and they possessed as much wealth as the bottom 90% combined. -The Atlantic, September, 2011

Ken, don’t worry about overnight change.  It’s not going to happen unless the government defaults and we need to rebuild the economy from scratch over the weekend…which sounded much less cynical and terrifying before I typed it out.  Oh, well.  Whatever.

Figure, though, that every dollar you move to a local bank (or credit union) is money circulating in and strengthening your local economy.  It’s also a tiny increment to the chance that the next big project won’t succeed.

It helps us hold the line on the economy’s health, rather than just hoping that, one day, someone in Washington will…uhm…I dunno, bring factory jobs back to a country where nobody’s left who can run a factory and a society where industry is a dirty thing best left to countries with no environmental law, maybe?  Or maybe we can hope for a socialist revolution, since that’s gone so well in the rest of the world.

Strategically, it’s better to just take our business elsewhere, even where it looks like it won’t make a difference.

Perhaps the most interesting thing here is the Fed Attorney’s claim that the NY Fed is in a situation like an attorney with a client.  Has it ever been made clearer that the NY Fed is simply a representative of the Banks and not their regulator?  How anyone can take them seriously as an independent agent after arguments like that is beyond me.

Michael nails it here.  The real story is the Fed thinks they are supposed to aide and abet Wall Street crimes not regulate and prevent them from happening.

Nice job Jake.

Good news.  What would also be helpful Mr. Bernstein, would be if you could find the names of the Feds and their emails involved in this case as well as that of the judge.  Many of us would like to lay our complaints on the Fed’s attempted cover up policies and register them with precisely the lawyers (such as attorney Gross) who did it. Conversely I would like to pat judge Abrams on the back some way - perhaps with a congrafs email..  If you could furnish such information to let your readers get up close and personal with the players it would serve justice. Let us 99%ers at ‘em. Sort of like an e Madame defarge. Same for Goldman folks.  Who are they and what are their personal addresses?  Not catch all corporate addresses, but their actual personal emails (maybe too their twitter accounts and other social media availability) .  If you cannot find these addresses,  I bet NSA has them - particularly if they are Americans . Just ask, I bet they’d share…

I am interested in reading the actual responses by the Fed and by the judge.  Please provide them with your articles.  Thanks.  I did print and read Carmen Segarra’s actual legal complaint.

I didn’t even spot that, Michael.  I’m also concerned about the phrasing of the decision, implying that it’s not about rights (to know or to privacy), but rather because the information is already available.  To this may not be much of a victory.

Everyone brings joy to this world- some by entering it, others by leaving.

If it is too obvious that you and your institution are serious liabilities to the world, and the planet will be a much better place to be if you disappear,  then change the subject from an existential one to a moral discussion. What should you do differently so you would comply with law and meet the expectation of the public, who has placed blind trust in you.

Nothing changes even if the lawyer wins a big settlement and the powers got slapped on the wrist with chump-change fines. They will promise to change their ways and then go about doing business as usual.

Her case is going to be fodder for the next Erin Brockovich David-beats-Goliath feel-good movie. Toxic stuff continues to seep into the water and ocean as we speak. Search BP oil spill.

As an ex-banker myself, I find it odd that the NY Fed can claim that a lack of transparency would induce the banks being supervised to be “less willing to give that [confidential] information”.  In my experience, it was not a question of not providing requested information; the regulators job was to obtain whatever was needed and review it accordingly.  How else to regulate?  What would happen to “regulation” if the examiners were required to have to subpoena documents to do their job?  It would make a joke of the entire regulatory system, which is already mu to cozy with the regulated!

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