Goldman Sachs faces an accumulating number of lawsuits from shareholders angry at the bank's mortgage trading activities in the run-up to the credit crisis and claiming they should have been told the bank was facing a fraud investigation by regulators.
Having come under fire over how much it should have disclosed about the Securities and Exchange Commission's investigation ahead of the fraud charges filed last month, Goldman is giving shareholders more details than ever before of its legal quagmire. It published not only the outline of the legal claims against it but also the actual court filings by five shareholders, each of which is seeking to become a class action lawsuit that other Goldman investors can join.
Regardless of whether Goldman is found guilty of committing fraud in the complex subprime mortgage deal at the heart of the SEC's allegations, or settles the case, it must now also defend itself against accusations that it should have told investors last summer that it had received a Well's notice from the regulator.
A Well's notice is a formal warning that civil charges are likely. Goldman says it had not considered the notice to be material information, and had not expected charges to be brought. It denies the SEC's allegations.
The shareholder suits against it allege "breach of fiduciary duty, corporate waste, abuse of control, mismanagement and unjust enrichment in connection with collateralised debt obligation offerings made between 2004 and 2007, and challenging the accuracy and completeness of Goldman's disclosure", it said in a regulatory filing.
Shareholders will gather at Goldman's New York offices on Friday for its annual meeting, which threatens to be an explosive affair.Reuse content