Learn what the following Goldman Sachs and Marcus Bank lawsuits could mean for you.
As one of the largest and most influential investment banks operating throughout the world, the Goldman Sachs Group, Inc. provides services in the prime brokerage, asset management, investment management, and securities underwriting financial sectors. Headquartered in New York, Goldman Sachs’ Marcus consumer division offers consumers a no-fee, high-interest rate savings account.
Goldman Sachs is considered one of the primary players in the United States Treasury securities market. The Wall Street banking and securities investment giant became embroiled in the subprime mortgage crisis that triggered the worldwide financial meltdown of late 2008. Because of its involvement in the financial crisis, Goldman Sachs received $10 billion from the United States Department of Treasury as an integral investment made by the American government to stave off the second Great Depression.
Former high ranking executives at Goldman Sachs have worked in a wide variety of federal government positions after leaving the Wall Street investment bank. Because of alleged conflicts of interest, especially when it came to the “Too big to fail” bank bailouts of 2009, Goldman Sachs has dealt with a large number of class action lawsuits.
Let’s take a look some of the most prominent lawsuits against them.
Settlement of Bond Rigging Class Action Lawsuit
Taking advantage of a volatile market, many banks exploited the 2008-09 financial crisis by overcharging for bonds and stocks. In late 2019, Goldman Sachs joined the ranks of the big banks accused of rigging bond prices by agreeing to a settlement worth more than $20 million to resolve claims by investors that the Wall Street banking giant manipulated the price of the bonds issued by struggling Fannie Mae and Freddie Mac.
The more than $20 million price tag agreed to by Goldman Sachs represented the largest payout of any bank involved in the bond rigging controversy. Deutsche Bank AG agreed to pay $15 million and First Horizon National Corporation out of Tennessee settled for $14.5 million.
Investors that included the Treasurer of Pennsylvania, Joe Torsella, claimed the big banks leveraged their strong market positions to overcharge for Freddie Mac and Fannie Mae bonds between January 1, 2009 and January 1, 2016. A settlement for the class action lawsuit received preliminary approval in late 2019.
Two 1MDB Class Action Lawsuits
Also late in 2019, the Malaysian government file criminal charges against Goldman Sachs and two of its most prominent investment bankers. The charges included bribing government officials and mishandling the funds associated with multiple infrastructure development projects financed through 1MDB holdings. 1MDB is Malaysia’s state development fund.
Malaysian government officials are specifically targeting three bond deals that Goldman Sachs organized and managed in 2012 and 2013. The two class action lawsuits allege the money generated by the three bond transactions moved through the Singapore subsidiary operated by Goldman Sachs. The Wall Street investment bank initially responded to the two class action lawsuits by issuing the statement that it “continues to cooperate with all authorities investigating this matter”.
The two class action lawsuits triggered a per share price decline for Goldman Sachs stock of nearly 30%. In a press release, Goldman Sachs stated “The 1MDB bond offerings were meant to raise money to benefit Malaysia; instead, a huge portion of those funds were stolen for the benefit of members of the Malaysian government and their associates. The lawsuits are without merit and we intend to vigorously contest them.”
Gender Discrimination Class Action Lawsuit against Goldman Sachs
As one of the largest group of plaintiffs ever participating in a gender discrimination class action lawsuit, more than 1,000 women joined together to prevent Goldman Sachs from forcing them to accept binding arbitration as the dispute resolution procedure. Attorneys for the class action group of women argued that Goldman Sachs waited too long to force an open court case into the behind closed doors binding arbitration process.
The lawyers for the plaintiffs mentioned more than 750 docket entries, 376 discovery requests, and 33 days of depositions that comprised the open court hearings. Former Goldman Sachs vice president, Christina Chen-Oster filed the first gender discrimination complaint against Goldman Sachs back in 2005. A judge eventually ruled that Chen-Oster and her co-plaintiffs had the right to file a class action lawsuit for gender bias that covered more than 2,300 other current and former Goldman Sachs employees.
The attorneys for the plaintiffs in the class action lawsuit wrote in the most recent filing that “It is no coincidence that Goldman’s last-ditch effort to dismantle the class came after it lost” The judge presiding over the new class action lawsuit granted the plaintiffs full access to personnel files for proving the allegations of gender discrimination.
SEC Filed Civil Fraud Lawsuit against Goldman Sachs
Goldman Sachs ran afoul of the United States Securities and Exchange Commission (SEC) in April of 2010. The federal securities trading regulator charged Goldman Sachs and Vice President Fabrice Tourre with conducting acts of securities fraud. As one of the many disasters that followed the financial crisis of 2008. The SEC claimed in the civil lawsuit that Goldman Sachs “materially misstated and omitted facts in disclosure documents” about a financial security called a synthetic CDO. A synthetic CDO is a form of an investment created by an independent manager that chooses the assets that become part of the investment.
In addition, the SEC alleged Goldman Sachs “permitted a client that was betting against the mortgage market [the hedge fund manager Paulson & Co.] to heavily influence which mortgage securities to include in an investment portfolio, while telling other investors that the securities were selected by an independent, objective third party. Tourre also misled ACA into believing … that Paulson’s interests in the collateral section [sic] process were aligned with ACA’s, when, in reality, Paulson’s interests were sharply conflicting”.
Goldman Sachs and Offshore Tax Havens
The United States Department of Treasury has ramped up its judicial diligence when it comes to monitoring the offshore tax havens set up by Goldman Sachs. In a 2016 report released by Citizens for Tax Justice, “Goldman Sachs reports having 987 subsidiaries in offshore tax havens, 537 of which are in the Cayman Islands despite not operating a single legitimate office in that country, according to its own website. The group officially holds $28.6 billion offshore.” Since 2008, critics of the Wall Street investment bank have claimed the company achieved its tax savings by moving profits into subsidiaries and banks in nations like the Cayman Islands that have no corporate income tax rates.
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