Goldman Makes Rare, Extensive Lawsuit Disclosure

Monday, 03 May 2010 01:38 PM

 

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Goldman Sachs, in a rare move, disclosed a trove of information about the many lawsuits and shareholder challenges facing the bank.

Goldman, which made the disclosure in a filing with the U.S. Securities and Exchange commission, has been criticized for being too tight-lipped about its legal entanglements.

The disclosure came nearly a week after Chief Executive Lloyd Blankfein faced off with a Senate panel about the role the dominant Wall Street bank played in the subprime mortgage market meltdown.

The filing says several shareholder suits have been filed against the bank, accusing it and its executives of "breach of fiduciary duty, corporate waste, abuse of control, mismanagement and unjust enrichment ... and challenging the accuracy and completeness of GS Inc.'s disclosure."

Goldman, which included copies of a half dozen shareholder complaints in the filing and a shareholder letter, said the lawsuits seek declaratory relief, compensatory damages, restitution and corporate governance reforms.

The shareholder suits began pouring in after the SEC accused Goldman of failing to tell investors the securities underlying a so-called synthetic collateralized debt obligation were chosen by billionaire hedge fund investor John Paulson, whose fund was betting that the CDO would lose value.

Goldman also has been criticized for not telling shareholders that last summer it received a Wells Notice from the SEC, signaling the likelihood of civil charges.

Some of the shareholder lawsuits allege that Goldman's failure to disclose the Wells Notice cost them dearly, given the 21 percent drop in the company's shares since the filing of the SEC civil suit.

© 2014 Thomson/Reuters. All rights reserved.

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