(Editors: Contains potentially offensive language in paragraphs
1 and 4)
By Suzanne Barlyn
June 13 A former trader for Goldman Sachs Group
Inc who lost a pay dispute against the firm wants a court to
overturn the ruling after a recording revealed that an
arbitrator described his case as "bullshit," according to court
Deeb Salem, known for his role in shorting the U.S. housing
market in the run-up to the financial crisis, alleged in court
papers on Friday that Financial Industry Regulatory Authority
(FINRA) arbitrators improperly dismissed his case at Goldman's
request in March, before he fully presented his evidence and
Salem, who worked on Goldman's mortgage trading desk, had
been seeking more than $21 million in compensation as well as
legal costs and other penalties, according to the FINRA panel
A conversation among the three arbitrators about Goldman's
request shows they had made up their minds before hearing
Salem's entire case, according to the court petition. "I don't
mean to be crude about it, but as far as I'm concerned, this
case is bullshit," said Martin Zern, chairman of the
three-person FINRA panel, according to the petition. The
remarks, which were inadvertently recorded, appeared in a
transcript of the proceedings, according to Salem's lawyer
Jonathan Sack in New York.
Zern, reached by telephone on Friday, said he could not
discuss the case.
Zern made the remark as the arbitrators discussed the
appropriate time to dismiss the case, Salem alleged.
Spokeswomen for Goldman and FINRA declined to comment.
Salem gained some notoriety after the financial crisis
because a U.S. Senate panel included his own performance review
for 2007. In the review, he detailed what he described as
Goldman's plan to put a "short squeeze" on the mortgage market.
He also described himself as an expert trader and said he
deserved to be promoted to managing director.
In his FINRA claim against Goldman, Salem said he deserved
higher bonuses for 2010 and 2011, and a bonus and deferred
compensation that he did not receive for 2012. He left the Wall
Street bank that year to take a job at Golden Tree Asset
FINRA, Wall Street's industry-funded watchdog, also runs the
arbitration forum where investors and licensed brokerage
employees must typically resolve their legal disputes against
Arbitration rulings are typically binding. However, courts
may overturn them in limited circumstances, such as when an
arbitrator is biased.
(Reporting by Suzanne Barlyn; Additional reporting by Lauren
LaCapra; Editing by Tom Brown)