N@N

Founders of Marvell Technology Group File Lawsuit Against Goldman Sachs

^{Published on 2011-04-12 05:41:03 - Market Wire}
 

SAN FRANCISCO--([ BUSINESS WIRE ])--The founders of Marvell Technology Group (Nasdaq: MRVL), Sehat Sutardja and Weili Dai, filed a lawsuit in San Francisco Superior Courtagainst Goldman Sachs (NYSE: GS) and two account executives, alleging Goldman Sachs manipulated the 2008 financial crisis to defraud the two Silicon Valley executives of more than $100 million.

"When DeFoor was questioned about the need to sell the Marvell shares, DeFoor stated instructions were from Goldmana™s most senior executives."

Mr. Sutardja and Ms. Dai founded Marvell Technology Group, a worldwide semiconductor company in Santa Clara in 1995. Goldman Sachs managed the IPO for Marvell and put the two executives into their Private Wealth Management Group. It is alleged that once the two executivesa™ personal wealth was under the financial management of Goldman Sachs, the firm abused the two executivesa™ trust, manipulated their relationship, and ultimately defrauded them of more than $100 million.

The suit alleges Goldman Sachs issued a margin call for the two executivesa™ investment accounts, which were managed by Goldman Sachs Private Wealth Management Group, under false pretenses, wrongly claiming an SEC Rule mandated the margin call when no such rule existed. It is alleged the margin call was a result of Goldman Sachsa™ need to repair its balance sheet and insulate itself from the extreme market turmoil of the financial crisis in 2008. Further, the complaint alleges that Goldman Sachsa™ wholly improper margin call reflects the Goldman Sachsa™ willingness to put its own interests ahead of its clients. The complaint alleges that:

aThrough a series of extraordinary and deceitful acts, geared to save Goldman at all costs, the Firm used its clientsa™ accounts to leverage its success, making unreasonable collateral calls on its private wealth management clients. Despite receiving an investment of $10 billion as a participant in the United States Treasurya™s TARP Capital Purchase Program, Goldman forced its clients to unnecessarily liquidate their holdings through forced margin calls, only to repurchase these same shareholdings for accounts owned by Goldman and its related hedge funds, some currently under investigation by the federal government. Goldmana™s focus was to strengthen its balance sheet, no matter how many relationships were destroyed in the process. The consequences to Goldman clients, such as Plaintiffs, were disastrous. They became the victims of one of the largest acts of corporate greed and avarice in the history of our financial markets.a (Page 1, Sehat Sutardja and Weili Dai v. Goldman Sachs & Co., Inc.)

As alleged in the complaint, Plaintiffs were told by Goldman Sachs that orders for the margin call were issued from Goldman Sachsa™ most senior executives. The complaint alleges the margin call was issued during the exact same time frame the now infamous Raj Rajaratman and other employees of the Galleon hedge fund were perpetrating mass insider trading using information obtained from Goldman Board members. According to the SEC investigation, Rajaratman received inside information from the highest levels of Goldman regarding Marvell in 2008a"the same time Plaintiffs were improperly forced to sell their Marvell shares.

aIn November 2008, Goldman contrived grounds to make a amargin calla on Plaintiffsa™ accounts. Goldman insisted the pledged Marvell shares be sold immediately. Acting on behalf of Goldman, [Bradley] DeFoor [the account executive] justified the margin call with a lie, telling Dai and Sutardja there was an SEC rule that DeFoor called the aSEC Five Dollar Rule.a According to DeFoor, the aSEC Five Dollar Rulea required Plaintiffs to sell the Marvell shares in the margin account because the value of Marvella™s stock had dropped below $5 per share.

aThere is no aSEC Five Dollar Rule.a No such SEC rule exists, a fact DeFoor and others at Goldman knew at the time they issued the margin call on behalf of Goldman, forcing Plaintiffs to sell their Marvell shares. Goldman maintained this lie for years. As recently as November, 2010, senior Goldman officials, John Weinberger and Tucker York, told Dai and Sutardja the aFive Dollar Rulea might be a aNew York Stock Exchangea rule, not an SEC rule. No such New York Stock Exchange aFive Dollar Rulea exists.

aWhen DeFoor was questioned about the need to sell the Marvell shares, DeFoor stated instructions were from Goldmana™s most senior executives.a (Page 4 and 5, Sehat Sutardja and Weili Dai v. Goldman Sachs & Co., Inc.)

The suit was filed by two San Francisco area law firms, KEKER & VAN NEST LLP and COTCHETT, PITRE & McCARTHY, LLP - signed by John Keker and Joseph Cotchett. The suit seeks return of millions of dollars and punitive damages.

FOR FULL COMPLAINT, SEE[ www.cpmlegal.com ]