Court nixes Federal Reserve ex-employee's retaliation claim

AP News
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Posted: Sep 23, 2015 4:47 PM

NEW YORK (AP) — The claims of a former senior bank examiner at the Federal Reserve Bank of New York who says she was fired for her handling of a probe of Goldman Sachs failed Wednesday to impress a federal appeals court, which derided her effort to hold three former colleagues responsible as "frankly quite silly."

The 2nd U.S. Circuit Court of Appeals in Manhattan resorted to unusually blunt language as it agreed with a lower-court judge who dismissed a lawsuit Carmen Segarra filed last year.

She claimed the New York Fed interfered with her examination of the financial firm's legal and compliance divisions and directed her to change findings.

The appeals court was particularly dismissive of Segarra's effort to hold three New York Fed employees responsible under a whistleblower protection law.

"Segarra's attempt to bring the Individual Defendants within the statute's ambit is entirely speculative, meritless, and frankly quite silly," the court said.

It said the law was clear that she could not hold the employees liable because none of them worked directly or indirectly for the Federal Deposit Insurance Corp., a requirement of the law.

Lawyers did not immediately respond to messages seeking comment.

The Federal Reserve oversees Wall Street's biggest financial institutions. It is one of a dozen banks that team with a board of governors to make the Federal Reserve System.

Among the Federal Reserve's major responsibilities, the bank must evaluate the soundness of financial institutions by measuring the quality of their risk-management systems, financial condition and compliance with banking laws and regulations.

Last year, Senate Democrats accused the Fed of being too close to big banks it regulates.

After Segarra's hiring, she was assigned to examine the legal and compliance division of Goldman Sachs.

She claimed her probe was hampered by three employees, including a relationship manager between the New York Fed and Goldman Sachs and another Federal Reserve employee who carried out his work duties at Goldman Sachs' offices.