Goldman's CEO, Board Named in Lawsuits

Goldman Sachs's CEO and other top officers are accused in a pair of shareholder lawsuits of lax oversight in deals involving risky mortage-backed securities that later went bad.

The lawsuits filed Thursday in New York State Supreme Court name Lloyd Blankfein and the firm's entire board of directors as defendants.

The suits follow civil fraud charges filed last week by the Securities and Exchange Commission over the same investments.

The SEC says Goldman committed fraud by failing to disclose important information about the securities that might have scared off investors.

More on Goldman Sachs:

Spitzer: SEC will Likely win Case against Goldman Sachs
Analysts Bullish on Goldman, Despite Charges
SEC vs. Goldman: A Matter of "Material"

The two suits, filed by shareholders Robert Rosinek and Morton Spiegel, accuse Blankfein and other officers of "systematic failure" over 3 1/2 years for not properly vetting 23 mortgage-linked deals at the center of the SEC suit. Those deals, called Abacus, led to $1 billion in losses.

A Goldman spokesman declined to comment.

The suits appear to be the first shareholder cases related to the Abacus deals. If so, they may mark the start of what legal experts expect will be a flood of shareholder cases against Goldman Sachs.

The plaintiffs seek unspecified monetary damages.

The mortgage-backed securities at the heart of the lawsuits are widely blamed for worsening the financial system's troubles by allowing investors to place massive bets on the direction of the housing market. That triggered major losses at a number of financial institutions after the housing market started to crumble.

As in the SEC case, the shareholders allege that Goldman should have noted in marketing the Abacus securities that a hedge fund betting they would fall in value had helped choose the mortgages on which they were based.

Within a few months of being sold to investors, the value of the Abacus securities fell fast. The hedge fund, Paulson & Co., run by billionaire John Paulson, pocketed $1 billion in profits, the suits says.

Paulson has not been accused of wrongdoing by SEC, and is not as a defendant in the shareholder cases.

[brianbwb2011]

It is funny, reading some of these posts, the ASPD-afflicted right wing racist crowd trying to demonize a political party because people are opportunistic by nature.

Yo, tea-klux baggers, you miscreants supported genocide against innocent countries, committed on the basis of lies told by greedy war profiteers, the vast majority of whom are affiliated with your own party.

The motivation of the genocide is the same greed that made Wall St. steal from the people. You supported the politicians who made it possible, because you rejected any attempts to regulate the Wall St thieves, calling it "socialism".

In fact, you now whine about the thieves, when the truth is that had they been GOP, you would be defending their right to steal, and railing against any attempt to defend ourselves against them.

In fact the only difference between Democrats and Republicans is that the Republicans also include racism as one of the tactics in their agenda, and for that reason alone, the Democrats are by far the lesser of two evils.

This is the tea-klux bagger logic,

Democrats; theft and corruption. (bad)

GOP; theft, corruption, racism, and mass murder. (good)

The people chose, the Democrats won. You lost.

[babooph]

Standard CEO testimony"Did not know anything going on in the company"-standard US propaganda "We have to pay these "VALUABLE" guys 100 million or they will go elsewhere"-only the most brainwashed can put these oxymorons together !!I can imagine the CEO job interview-I don't know anything-great you are hired !

[cbsblogger]

If they are charged in a civil suit the corporation will likely be responsible for legal costs and settlement. Now if they were criminally charged such as under RICO then they may be required to cover their own defense and of course face punitive actions.

[honest_pols]

ADDITIONAL INVESTIGATIONS AND PURGES OF 'FINANCIERS', INVESTMENT BANKERS,
AND OTHER FINANCIAL PARASITES EXPECTED - BOTH 'ON AND OFF' OF WALL ST

We must relentlessly pursue these greedy, corrupt, selfish, financial sociopaths who unconscionably take, and contribute very little or nothing, back to society, to their community or to their country, with the exception of sapping our financial security and ruining hundreds of millions of others' lives.

It will not be enough to watch our so-called justice system simply mete out symbolic or even suspended prison terms for these economy-and-nation wreckers. We must demand that these criminal parasites be made to serve lengthy prison terms with hard labor, pay heavy fines to government, and compensation to their victims, as well as their money, assets, etc, confiscated.

We have permitted such past behavior to corrupt our young people 'by example'. It will take a hell of a lot to reverse the same.

[sjc_1]

It is about time CEOs and Boards of Directors were held accountable. There are laws that say the CEO must sign off on accounting reports, that should apply to corporate business conduct as well.

[gig76]

If banks are smart, they will realize that most depositers are from Democrats. Therefore, banks need to cater to Democrats moreso since they are the bread and butter to bank operations. Also, with more deposits, more lending available. Otherwise, most Republicans play the market with risky derivatives, which are extreme and without directives. So banks be sure to be smart. Go Democrats -- banks do very well under Democrats, remember high interest IRAs and CDs under Carter? That was great and individuals were actually able to live on their interest, not the principle. Now that's good for investments, not so good for housing and credit.