Another High Profile Goldman Sachs Litigation SNAFU

Time to dust off the old juris doctor sheepskin, and wonder aloud about the legal advice that Goldman Sachs has gotten over the past few years. It’s a question worth asking as I review the firm’s recent history of unforced errors in the courtroom. The most recent case in point: the collapsing prosecution of former Goldman computer coder Sergey Aleynikov.

There’s a pattern here, and we can discern its outlines by starting with the “Fabulous Fab” Tourre-Abacus case. This was a simple fraud case involving Securities and Exchange Commission rule 10B-5 governing “manipulative and deceptive practices.” Any rookie lawyer could have looked at the facts concerning the sale of a monumentally complex security and recommended a quick settlement involving a modest fine. Instead, Goldman received what I can only surmise was some fairly awful advice, leading it to fight the allegations tooth and nail. I don’t know if it was a new legal team or simple exhaustion that led to an about-face, but Goldman settled in 2010 for a whopping $550 million fine and a lot of embarrassment.

The good news for Goldman is the Aleynikov case seems to be one of the final remnants of that misguided legal regime. The bad news is some more embarrassment from that era may well follow.

A quick review of the Aleynikov case:


Continues here: Why Goldman Sachs Keeps Losing in Court



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  1. VennData commented on Apr 22

    I wonder how much the battlecry that losing will undermine our business model is the problem?

    Or how much they are fighting the next war, flexing muscles that they have credibility when they scream at the regulators who find them cheating and threaten court action?

  2. Expat commented on Apr 22

    Wow. It must be so hard for Blankfein to deal with all embarrassment. Luckily, he can hide his shame behind the giant piles of money he has.

    GS has avoided much of the prosecution (“persecution” according to his Royal Bankership Dimon) and massive fines paid by other banks. Tossing a few losers to the wolf pups makes GS look as if they are losing when, in fact, they are winning handsomely.

    You can write this kind of article again when we finally (ha!) read about Blankfein getting his teeth knocked out and getting gang-raped in prison. Perhaps that will truly be embarrassing, though I am sure they will figure a way to profit from that!

  3. mitchn commented on Apr 22

    For decades, Goldman worked hard to convince corporate America that it hired only the best and the brightest, with some justification. In the ’00s, that somewhat debatable claim seems to have become accepted as gospel within Goldman itself, with predictable consequences (Abacus, muppets, etc.). Goldman was “blessed” to have its former CEO at the head of Treasury when the shit hit the fan in 2008, but the faux-humility of Blankfein et al since then doesn’t erase the fact that crony capitalism saved the firm’s bacon. If we elect a Republican president in 2016, watch out. The Masters of the Universe will be back with a vengeance.

  4. fearlesspectator commented on Apr 22

    The mind reels at the gross incompetence of the investigators and prosecutors, both State and Federal, in this sordid mess of their creation. Does not leave one with much faith in the “system of justice.

  5. Crocodile Chuck commented on Apr 23

    Great precis, BR & witty, as well.

    The Mega-Question: how could GS have been so poorly served by its own in-house consel? I always thought they prided themselves on hiring the BEST?

    MOST embarrassing for them..

  6. Joe commented on Apr 23

    Ya know, litigators deserve respect too. And a nice cushy income.Ya so damn interested in providing jobs for everybody and pushing money int the economy and doin’ the virtuous circle thing of lifting everyone higher, and it’s just so biased toward the everyday working stiff. What about yer sleazy onna inside and slick onna outside greasy face high buck lawyers? How’s he gonna keep his portion of the economy (boutique car dealers, street corner pharma, divorce lawyer [BROTHERS!!!] and interpersonal recreational specialists) when the clients’ money stays the clients’ money. Loosten up. Is there client money that can be billed? A dollar left? Is there no more stationery to list billable hours? Then there’s still a case worth taking to the end of the world… Or until you figure out how to charge the client the last loose change to be found for an independent review….

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