September 23, 2015 / 4:21 PM / in 4 years

Ex-NY Fed bank examiner who criticized Goldman loses appeal

(Reuters) - A federal appeals court on Wednesday ruled against a former bank examiner for the Federal Reserve Bank of New York who said she was fired after refusing to change her findings about Goldman Sachs Group Inc.

By a 3-0 vote, the 2nd U.S. Circuit Court of Appeals in New York said Carmen Segarra did not deserve federal whistleblower protection over her May 2012 firing, which came fewer than seven months after she joined the New York Fed.

Linda Stengle, a lawyer for Segarra, did not immediately respond to requests for comment.

Segarra said she was fired after resisting pressure from colleagues Michael Silva and Michael Koh to change her findings that Goldman’s conflict-of interest policies were deficient.

She said they were concerned the findings could prompt a client exodus and cause the Wall Street bank to “explode.”

Segarra’s review included Goldman’s advisory work for El Paso Corp, an energy company that Kinder Morgan Inc bought for about $23 billion.

Goldman owned a large Kinder Morgan stake, which some El Paso shareholders said gave it an incentive to drive the purchase price down.

In April 2014, U.S. District Judge Ronnie Abrams dismissed Segarra’s lawsuit, saying she failed to link her disclosure of Goldman’s alleged violations to her firing.

The appeals court upheld that ruling. It also rejected Segarra’s claim that Silva, Koh and a supervisor, Johnathon Kim, were liable under federal whistleblower law because their work indirectly benefited the Federal Deposit Insurance Corp, which might make use of information from the Goldman examination.

“Segarra’s attempt to bring the individual defendants within the statute’s ambit is entirely speculative, meritless, and frankly quite silly,” the appeals court said. “Neither sharing an interest in the financial well-being of a company nor sharing information about that company leads to a reasonable inference that the individual defendants, all of whom were FRBNY employees, were performing services for the FDIC.”

New York Fed spokeswoman Suzanne Elio declined to comment, including on behalf of Kim and Koh. Richard Hans, a lawyer for Silva, said his client “is happy to put this matter behind him.”

Last September, Segarra released taped conversations she had recorded to show what she saw as the cozy relationship between Goldman and the New York Fed. Goldman was not a defendant in her lawsuit.

The case is Segarra v. Federal Reserve Bank of New York et al, 2nd U.S. Circuit Court of Appeals, No. 14-1714. (Additional reporting by Nate Raymond)

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