Securities and Exchange Commission
files a civil suit, citing fraud over mortgage securities deals. Then, the Senate publicly scrutinizes the firm's executives, including CEO Lloyd Blankfein, in a heated hearing. Next, the Justice Department and the state of New York announce they are launching a criminal investigation into the the deals. Now, Goldman Sachs has disclosed that six lawsuits have been filed by its own shareholders in the wake of the fraud allegations. And these plaintiffs aren't limited to big-name investors.
Shareholders suing the firm include the Southeastern Pennsylvania Transportation Authority, the International Brotherhood of Electrical Workers Local 98 Pension Fund and the Louisiana Municipal Police Employees Retirement System. These unions represent hundreds of thousands of American workers, who had parts of their retirement funds tied up in Goldman stock.
According to the SEC filing, all shareholders are charging the firm and its executives with "breach of fiduciary duty, corporate waste, abuse of control, mismanagement and unjust enrichment."
MPERS cites that it had filed a similar complaint against Goldman's Board of Directors in September 2009, requesting that the firm "take action to remedy breaches of fiduciary duties and other misconduct committed by ... the Company." The new lawsuit incorporates the SEC charges of fraud as well as the bonuses paid out to executives in 2009. Ironically, these well publicized cases are likely to only devalue Goldman stock further.
Additionally, the law firm Wolf Popper LLP has filed a class-action lawsuit against the investment giant on behalf of investors who purchased Goldman securities between Aug. 5, 2009, and April 16, 2010. The firm is encouraging other investors to contact their attorney Robert Plosky via a press release.
Collectively, these shareholders are angry that Goldman failed to disclose, first, what they were up to, second, that the SEC was on to them (a major point of contention in all of the suits is that the firm did not disclose the SEC's July 2009 that it might be filing civil charges), and finally, the risk associated with implementing such allegedly murky tactics.
Goldman said in a filing that it expects more "regulatory and other investigations and actions commenced, with respect to offerings of collateralized debt obligations." Well, at least now they see what's coming and are alerting shareholders.
Of course, the firm may have more pressing issues to worry about, specifically, the reported criminal investigation being conducted by the Justice Department concerning fraudulent mortgage securities transactions in 2007.
But at least
This article was written by a staff member of MainStreet.com.