Goldman Seeks Merged Shareholder Lawsuits

Goldman executives and directors, including Chief Executive Lloyd Blankfein, are defendants in the many shareholder lawsuits filed against the bank.

(July 9, 2010) — Goldman Sachs Group Inc. is pushing for a federal judge to merge the 18 shareholder lawsuits it faces ahead of a US Securities and Exchange Commission civil fraud lawsuit.

The Wall Street bank faces seven securities class-action complaints, eight derivative complaints in Manhattan federal court, two derivative complaints in a New York state court, and another in a Delaware state court. The private lawsuits demand compensation from the bank, action against execs, and changes to how the firm operates. Goldman said it expected to have additional litigation in the future.

Goldman’s lawyer, Gandolfo DiBlasi from Sullivan & Cromwell LLP, claims the complaints are “substantially similar” and make “overlapping” allegations, including many from the SEC lawsuit, adding that the bank does not oppose a motion by the Teamsters Allied Benefit Funds to combine the eight derivative complaints overseen by U.S. District Judge Paul Crotty in Manhattan, Reuters reported.

The Louisiana Municipal Police Employees Retirement System (MPERS) is a plaintiff in one of the suits. The Southeastern Pennsylvania Transportation Authority and International Brotherhood of Electrical Workers Local 98 Pension Fund are co-lead plaintiffs in another. The funds claim that Goldman’s trading business has been conducted unethically and assert that the SEC charge could threaten the Wall Street firm’s reputation in the long run.

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On April 16, the SEC accused Goldman Sachs of fraud in failing to disclose conflicts in mortgage securities, which cost investors more than $1 billion and fueled the worst financial crisis since the Great Depression. While the housing market crumbed, shareholders say Goldman profited by betting against the mortgage investments it marketed to its customers.

The bank faces a court-imposed July 19 deadline to respond to the SEC lawsuit.

To contact the <em>aiCIO</em> editor of this story: Paula Vasan at <a href='mailto:pvasan@assetinternational.com'>pvasan@assetinternational.com</a>; 646-308-2742

(July 9, 2010) — A new survey shows that institutional investment managers are less optimistic about near-term global growth and more concerned that the Euro debt crisis will continue to affect markets for at least another six months.

“I think the survey shows managers are worried about the global economy in general, since the US economy is linked to the global economy” said Northern Trust’s Janet Yang to ai5000. “Managers are worried that developed countries will take longer to heal, as managers are leaning heavily on the crutch of Chinese economic growth.”

The second-quarter survey, conducted by Northern Trust Global Advisors (NTGA), the multi-manager arm of Northern Trust Corp., reflected a significant shift in optimism from the prior four quarters, with more than two-thirds of respondents expecting sovereign debt concerns in Portugal, Italy, Ireland, Greece and Spain to negatively impact global markets. Seventy-five percent of those surveyed anticipate that global growth will remain the same or decelerate.

While the survey showed a darker view on the global economy, the market view appeared to be more positive. “Financial markets don’t always follow the global economy,” said Yang to ai5000. “Sixty-two percent of managers are optimistic on market valuations and see opportunity, as countries have fortified their balance sheets.” Meanwhile, institutional managers are less concerned about the prospect of inflation or rising interest rates. At the same time, results show managers are more risk averse — 31% indicated they are more risk-averse, up from 23% in the first quarter.

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“There’s also a concern that world leaders are becoming too defensive…more schizophrenic,” said Yang.

As a result of waning confidence in global markets, 21% of managers have reduced exposure to the Eurozone on fears that Europe will need to bail out countries, the findings revealed, while the majority of managers (57%) have avoided these countries completely.

Additionally, the survey found that investment managers cited technology, energy, health care, emerging markets and industrials as the top five most attractive market segments. Consumer discretionary dropped out of the top five, while emerging markets moved higher in the rankings.

The survey by NTGA consisted of approximately 90 institutional managers — long-only mangers in US equity, international equity, and fixed income — who were polled in mid-June.

To contact the <em>aiCIO</em> editor of this story: Application Administrator at <a href='mailto:pvasan@assetinternational.com'>pvasan@assetinternational.com</a>; 646-308-2742