A New York Supreme Court judge and an industry regulator separately rejected injunctions against three former UBS employees accused of swiping algorithmic trading code.
Last week, New York State Supreme Court Judge Barbara R. Kapnick dissolved a preliminary injunction against three former UBS employees in its algorithmic group. The three former UBS employees, currently working at Jefferies & Co., are Jatin Suryawanshi, Partha Sarkar and Sanjay Girdhar.
The judge’s decision followed an arbitration ruling by the Financial Industry Regulatory Authority last month that said UBS was not entitled to a permanent injunction against the three, according to a New York State Supreme Court document.
Last March, UBS filed suit against Suryawanshi, Sarkar and Girdhar after the three moved to Jefferies & Co. earlier in the year. In the firm’s complaint, UBS charged the three with misappropriation of trade secrets–specifically, algorithmic code–and a laundry list of other offenses. The three men have denied that they took the code and say they are innocent of the charges.
These recent rulings came after UBS sought to make permanent a preliminary injunction-to which the defendants had consented to last August. UBS requested the permanent injunction to prevent Suryawanshi, Sarkar and Girdhar from using any of the algorithmic code they’ve been accused of taking to benefit their new employer, Jefferies.
The injunction had prevented the defendants from using any of the UBS code they’ve been accused of taking at their new firm. As they’ve denied taking the code, according to their attorney, this hasn’t been an issue for them.
UBS attorneys declined to comment on the rulings. The attorneys for the three defendants also declined to speak to Traders Magazine. Official court and FINRA opinions behind their respective injunction decisions were not available to the public at press time.
If nothing else, though, removing the preliminary injunction gives the defense one less legal matter to worry about, said an attorney specializing in intellectual property litigation. But without reading the reasons behind the decisions, he added, it’s difficult to see what they mean to either side’s case.
"For an injunction to get dissolved, usually that’s a bad sign for the merits of your case," the attorney said. "But in order to comment on it, I’d have to read why the judge did it. For all I know, it could have been a procedural mess-up, or something like that."
The FINRA panel’s last hearing date is scheduled for Wednesday. Shortly thereafter, the panel could be expected to render its decision on UBS’s remaining claims.
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 alleges 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 alleges, attempted to hide Sarkar’s actions by deleting internet history files from his own UBS computer.
Lance Gotko, an attorney with the law firm Friedman Kaplan Seiler & Adelman, who represents the defendants, has denied the charges. UBS, its attorneys and Jefferies have all said they would not comment while the lawsuit was pending.
