SAN FRANCISCO— Sehat Sutardja and Weili Dai, the founders of chip vendor Marvell Technology Group Ltd., filed a claim in the San Francisco office of the Financial Industry Regulatory Authority (FINRA) against Goldman Sachs and two account executives, alleging Goldman Sachs manipulated the 2008 financial crisis to defraud the two Silicon Valley executives of several hundred million dollars.
It is alleged that once the two executives' personal wealth was under the financial management of Goldman Sachs, the firm abused the two executives' trust, manipulated their relationship, and ultimately defrauded them of several hundreds of millions of dollars.
Sutardja and Dai filed a lawsuit last year in San Francisco Superior Court against Goldman and the two executives. Both the suit and the FINRA complaint allege that Goldman and the account executives abused the two executives' trust, manipulated their relationship, and defrauded them.
Goldman managed Marvell's 2000 initial public offering. Sutardja and Dai claim that at the time of alleged misdoings by Goldman and the two account executives, the couple were among Goldman's largest private wealth management group clients on the West Coast.
The timing of the FINRA complaint appears timed to tap into a wave of criticism against Goldman stirred up last week by a scathing New York Times editorial by a former Goldman executive that depicted Goldman as a firm that no longer prioritizes client's best interest but often steers them toward action that is most profitable for Goldman, even if it goes against client interests.
The FINRA complaint alleges that, among other things, Goldman encouraged Dai to buy more than $150 million worth of shares in Nvidia Corp. stock, which it claims was a conflict of interest considering that Goldman has its own positions in Nvidia at the time.
"Citing clear conflict of interest, the FINRA claim alleges no one from Goldman ever disclosed to claimants that Goldman was increasing its holdings in Nvidia shares, while simultaneously forcing claimants to sell their Nvidia shares at a loss," according to a statement released by Sutardja and Dai's attorneys. "Indeed, according to the FINRA claim, no one from Goldman ever disclosed to claimants that it was trading in Nvidia at all or that it provided investment banking services to Nvidia."
The FINRA claim also alleges that Goldman falsely issued a "margin call" for Sutardja and Dai's account.
The full statement from Sutardja and Dai's attorneys can be found here.
A friend of mine had a manged account at GS after his company's IPO in the late 90's. During the 2001 stock market crash GS lost about 70% of his money. GS's response was to call my friend and ask him to give them more money because with the 70% loss his account fell under the $5M minimum size of managed accounts. He did not have more money so GS simple kicked him out. This was GS 10+ years ago. It seems that they did not change or if they did it was not for the better. I would not trust them to take my dog for a walk, not to mention manage my money.
Wall Street is a nest of vipers. Anyone who trusts these crooks with their money deserves to have his head handed to him.
Reminds me of the story of the frog and the snake:
"One day a snake needed to get to the other side of a lake. He asked a nearby frog, "Friend, will you let me ride on your back to the other side?". The Frog replied, "Ok, so long as you don't bite me". So the two set off on the water. Half way thru, the snake bit the frog. The Frog screamed out, "Why did you do that! Now, we'll both die!". The snake replied, "Because it's my nature... and I work for Goldman Sachs".
Goldman Sach are the cream of the investment world, which by the day is getting more greedy. I do not believe that the testimony of one employee make a firm evil especially when the employee has worked for most of the financial crisis but it surely does raise serious questions.
Just a correction to my comment above: After reading through the complaint further, Sutardja and Dai did not buy the Marvell shares with their margin account as stated above. Instead, they were urged by Goldman to offer Marvell shares as collateral for Nvidia stock bought with the margin account. According to the complaint, when Marvell's stock price fell below $5 for one day in 2008, Goldman representatives told Sutardja and Dai that they had to sell the shares to comply with an SEC rule. According to the complaint, the rule does not actually exist. According to the complaint, Goldman kept the proceeds from the sale of the Marvell shares.
GS is fully capable of doing anytihng they want to benefit themselves with complete disregard to ethics towards its clients. I guess people still leaning on GS to improve/enhance their portfolio are the cows getting milked from under..he..he. Dumb and dumber.
My understanding about the rules of the Margin call is based on the house requirements, it has to satisfy the SEC rules but on top of the house rules. They can decide how much margin percentages you can have.
You can have margin position if the stocks are below $5 and high margin requirements if you own the volatile stocks like the internet stocks.