SAN FRANCISCO, March 19, 2012 /PRNewswire/ – The founders of Marvell Technology Group (Nasdaq: MRVL), Dr. Sehat Sutardja and Ms. Weili Dai, filed a explain in a San Francisco bureau of a Financial Industry Regulatory Authority (FINRA) opposite Goldman Sachs (NYSE: GS) and dual criticism executives, alleging Goldman Sachs manipulated a 2008 financial predicament to deceive a dual Silicon Valley executives of several hundreds of millions of dollars. At that time, Dr. Sutardja and Ms. Dai were one of Goldman’s largest Private Wealth Management organisation clients on a West Coast.
This FINRA explain comes during a time when stream and former directors and employees of Goldman Sachs are confronting rapist charge or are underneath indictment, and on a heels of a sardonic editorial by a former Goldman executive, Greg Smith, alleging widespread fervour and crime during a firm. Former Goldman Sachs executive Rajat Gupta has been indicted on 6 depends of bonds rascal and one count of swindling relating to insider trading. A second “insider” during Goldman Sachs, known to date as “Mr. X,” reportedly leaked tips to sidestep comment manager Raj Rajaratnam. Rajaratnam was convicted of insider trade charges in May, 2011. Finally, according to Bloomberg Businessweek, dual executives of Goldman Sachs are reportedly underneath review by sovereign authorities: David Loeb, a handling executive of Goldman Sachs, allegedly underneath review for flitting on tip information about record companies; and Henry King, a record researcher during Goldman Sachs, also being investigated by a FBI for allegedly charity insider tips to sidestep comment clients. A chairman during Goldman Sachs was allegedly hold on a handle daub leaking secrets about Intel and Apple.
“Our clients’ claims go directly to a enlightenment of crime during Goldman Sachs,” settled Joseph Cotchett, of Cotchett, Pitre McCarthy, LLP, one of a attorneys for Ms. Dai and Dr. Sutardja. “Our explain clearly states Goldman Sachs put a firm’s interests forward of a clients. As a result, a clients explain they were defrauded of hundreds of millions of dollars by Goldman. We will be seeking these indemnification and punitive damages.” This same prove was done by former Goldman Sachs Executive Director Greg Smith in his New York Times op-ed piece.
BACKGROUND ON DAI AND SUTARDJA: Dr. Sutardja and Ms. Dai founded Marvell Technology Group, a worldwide semiconductor association in 1995. Goldman Sachs managed a IPO for Marvell and put a dual executives into a Private Wealth Management Group. It is purported that once a dual executives’ personal resources was underneath a financial supervision of Goldman Sachs, a organisation abused a dual executives’ trust, manipulated their relationship, and eventually defrauded them of several hundreds of millions of dollars.
GOLDMAN ACCUSED OF RIPPING OFF CLIENTS: The issues lifted in a FINRA Claim are a same as those discussed by former Goldman Sachs Executive Director Greg Smith in his op-ed “Why we Am Leaving Goldman Sachs,” in a Mar 14, 2012 book of a New York Times. As Smith states:
“To put a problem in a simplest terms, a interests of a customer continue to be sidelined in a approach a organisation operates and thinks about creation money. Goldman Sachs is one of a world’s largest and many critical investment banks and it is too constituent to tellurian financial to continue to act this way. The organisation has veered so distant from a place we assimilated right out of college that we can no longer in good demur contend that we brand with what it stands for.”
Smith, a former executive executive and control of Goldman’s U.S. equity derivatives business in Europe, a Middle East and Africa, goes on to report what it takes to be a “leader” during Goldman, Sachs:
“What are 3 discerning ways to spin a leader? a) Execute on a firm’s “axes,” that is Goldman-speak for persuading your clients to deposit in a bonds or other products that we are perplexing to get absolved of since they are not seen as carrying a lot of intensity profit. b) “Hunt Elephants.” In English: get your clients — some of whom are sophisticated, and some of whom aren’t — to trade whatever will move a biggest distinction to Goldman. Call me old-fashioned, though we don’t like offered my clients a product that is wrong for them. c) Find yourself sitting in a chair where your pursuit is to trade any illiquid, ambiguous product with a three-letter acronym.”
Smith’s op-ed square describes a enlightenment “where not one singular notation is spent seeking questions about how we can assistance clients. It’s quite about how we can make a many probable income off of them.” He afterwards comments about “how callously people speak about ripping their clients off.” According to Smith, Goldman handling directors even impute to their possess clients as “muppets.”
In a May 18, 2010 New York Times article, unknown former Goldman insiders discussed Goldman’s support “to welcome conflicts [between Goldman and a clients], and argues that they are justification of a healthy tragedy between a organisation and a customers. If [Goldman employees] are not embracing conflicts, a evidence holds, we are not being assertive adequate in generating business.”
In their FINRA claim, Ms. Dai and Dr. Sutardja lay identical acts by a Private Wealth Management Group during Goldman. According to John Keker of Keker Van Nest, one of a attorneys for Ms. Dai and Dr. Sutardja, “Our clients’ FINRA Claim alleges a same march of control as described in Greg Smith‘s square in a New York Times. Our clients devoted their Goldman advisors with their whole life savings, and Goldman abused their trust.”
NVIDIA: The FINRA Claim states that in a Spring of 2008, with Goldman’s encouragement, Dai purchased shares on domain in a record association called NVIDIA. The FINRA Claim asserts that Goldman continued to suggest that Dai squeeze additional shares in NVIDIA even after she had bought some-more than $150 million value of NVIDIA stock.
The FINRA Claim provides a transparent instance of Goldman’s opposing interests: while Goldman was handling Claimants’ assets, including Claimants’ position in NVIDIA, Goldman was handling a possess seductiveness in NVIDIA. According to a FINRA Claim, on March 31, 2008, Goldman’s position in NVIDIA consisted of 9,168,023 shares (including both shares hold undisguised and “call” options). Over a subsequent quarter, during a really time that a FINRA Claim asserts Goldman was propelling Claimants to squeeze some-more NVIDIA shares, Goldman indeed decreased a possess land of NVIDIA. On June 30, 2008, Goldman hold 3,785,424 shares and call options – a scarcely 60% diminution in a singular quarter.
“Pump-and-dump schemes criticise a firmness of a batch markets,” pronounced Assistant Attorney General for DOJ’s Criminal Division, Lanny A. Breuer. “When batch brokers feat their devoted positions to heighten themselves during a responsibility of trusting investors…, we will pursue them vigorously.” Mr. Breuer’s quote was in anxiety to a Department of Justice’s ongoing investigations of “pump and dump” schemes.
The FINRA Claim goes on to lay on September 30, 2008, Goldman’s position in NVIDIA consisted of 3,162,225 shares (including both shares hold undisguised and “call” options). Over a subsequent quarter, during a really time that Goldman was forcing Claimants to sell their NVIDIA shares during a large loss, according to claims done to FINRA, Goldman indeed augmenting a possess land of NVIDIA. On December 31, 2008, Goldman hold 4,894,166 shares and call options – a scarcely 55% boost in a singular quarter.
Citing transparent dispute of interest, a FINRA Claim alleges no one from Goldman ever disclosed to Claimants that Goldman was augmenting a land in NVIDIA shares, while concurrently forcing Claimants to sell their NVIDIA shares during a loss. Indeed, according to a FINRA Claim, no one from Goldman ever disclosed to Claimants that it was trade in NVIDIA during all or that it supposing investment banking services to NVIDIA.
THE HENRY KING INVESTIGATION: According to Bloomberg News and other news sources, Goldman technical researcher Henry King is being investigated for insider trading. King was control of Taiwan Research for Goldman Sachs Asia. The journal pronounced King’s activities focused on a upsurge of information from Taiwan to U.S. investors about a supply sequence for personal-computer tools makers from Taiwan. The Wall Street Journal went on to criticism that a King review “takes a insider-trading review inside a investigate operation of a vital Wall Street organisation for a initial time.” King reportedly spoke frequently to Rajaratnam’s Galleon fund, as good as to Level Global, another sidestep comment drawn into a insider trade claims.
In June, 2008, Goldman “upgraded graphics chipmaker NVIDIA to buy from neutral, observant it now expects near-term business trends to be improved than initial thought.” This ascent was “the latest in a array of bullish analysts moves” by Goldman, assisting to boost NVIDIA batch by some-more than 35%. NVIDIA’s batch sealed adult some-more than 2.5% during $24.85 on June 5, 2008, after Goldman Sachs analysts increased a rating to “buy” from “neutral.” At a time, Goldman announced a perspective that NVIDIA’s “trends in a near-term business are approaching to be improved than we had expected.”
THE EXPERT NETWORKS AND GOLDMAN: In November 2010, a Department of Justice began charging people associated to Primary Global Research (“PGR”), an “expert networking firm,” with allegations of insider trading. Individuals charged embody Samir Barai, owner of Barai Capital; Donald Longueuil and Noah Freeman, sidestep comment managers SAC Capital; and Winifred Jiau, a PGR consultant and former NVIDIA employee. Barai, Longueil, Freeman, and Jiau conspired to trade bonds formed on inside information about, among other companies, NVIDIA and Marvell.
Barai and Freeman paid PGR thousands of dollars any month for entrance to Jiau, who, in turn, supposing them with minute inside information about NVIDIA and Marvell. Jiau performed a inside information from employees during NVIDIA and Marvell. Barai, Longueuil, and Freeman have pleaded guilty to bonds fraud. Jiau was attempted and convicted of bonds rascal in June 2011. Freeman testified for a Government during Jiau’s hearing and described her inside information as “absolutely perfect.” Freeman explained: “She supposing us with roughly finish financial formula before they were announced.” Freeman testified that a information was “extremely” useful in executing trades, and that he done $5 to $10 million trade on a basement of Jiau’ s inside information.
Barai Capital was a Goldman customer and used Goldman to govern trades formed on NVIDIA and Marvell inside information during or around a same time Goldman was forcing Claimants to oath their Marvell shares as material for a domain loan and forcing Claimants to sell a NVIDIA shares purchased with a domain loan.
MARGIN CALL: According to a FINRA Claim, Goldman Sachs released a domain call for a dual executives’ investment accounts, that were managed by Goldman Sachs Private Wealth Management Group, underneath fake pretenses, poorly claiming an SEC Rule mandated a domain call when no such order existed. It is purported a domain call was a outcome of Goldman Sachs’ need to correct a change square and isolate itself from a impassioned marketplace misunderstanding of a financial predicament in 2008. Further, a censure alleges Goldman Sachs’ unconditionally crude domain call reflects Goldman Sachs’ eagerness to put a possess interests forward of a clients. The FINRA explain alleges:
“Through a array of unusual and treacherous acts, geared to save Goldman during all costs, a Firm used a clients’ accounts to precedence a success, creation irrational material calls on a private resources supervision clients. Despite receiving an investment of $10 billion as a member in the United States Treasury’s TARP Capital Purchase Program, Goldman forced a clients to unnecessarily repay their land by forced domain calls, usually to repurchase these same shareholdings for accounts owned by Goldman and a associated sidestep funds, some now underneath review by a sovereign government. Goldman’s concentration was to strengthen a change sheet, no matter how many relations were broken in a process. The consequences to Goldman clients, such as Plaintiffs, were disastrous. They became a victims of one of a largest acts of corporate fervour and covetousness in a story of a financial markets.” (Page 2, Weili Dai and Sehat Sutardja v. Goldman Sachs Co., Inc., et al.)
As purported in a FINRA claim, Plaintiffs were told by Goldman Sachs that orders for a domain call were released from Goldman Sachs’ many comparison executives. The FINRA explain alleges a domain call was released during a accurate same time support a now barbarous Raj Rajaratman and other employees of a Galleon sidestep comment were perpetrating mass insider trade regulating information performed from Goldman Board members. According to a SEC investigation, Rajaratman perceived inside information from a top levels of Goldman per Marvell in 2008—the same time Plaintiffs were improperly forced to sell their Marvell shares.
NO SEC FIVE DOLLAR RULE: An critical claim in a FINRA Claim is Goldman constructed a domain call formed on a fabulous “SEC Five Dollar Rule.” As with Smith’s New York Times op-ed piece, Ms. Dai and Dr. Sutardja’s FINRA Claim contends:
“In November 2008, Goldman constructed drift to emanate a domain call on Claimants’ accounts. Goldman insisted that Marvell shares had to be solitary immediately. Acting on interest of Goldman, [Bradley] DeFoor fit a domain call with a lie, revelation Dai and Sutardja there was an SEC order that DeFoor called a ‘SEC Five Dollar Rule.’ According to DeFoor, a ‘SEC Five Dollar Rule’ compulsory Claimants to sell a Marvell shares in a domain criticism since a value of Marvell’s batch had forsaken next $5 per share.”
“There is no ‘SEC Five Dollar Rule,’ a fact DeFoor and others during Goldman knew during a time they released a evident domain call on interest of Goldman. Goldman confirmed this ‘SEC Five Dollar Rule’ distortion for years. As recently as November 2010, comparison Goldman officials John Weinberger and Tucker York told Dai and Sutardja a ‘Five Dollar Rule’ was a ‘New York Stock Exchange’ rule, not an SEC rule. According to these comparison Goldman executives, a NYSE’s ‘Five Dollar Rule’ compulsory a Marvell shares be solitary since their value had forsaken next $5 per share. No such NYSE ‘Five Dollar Rule’ exists, as Weinberger and York good knew.”
“When Sutardja questioned DeFoor about a need to sell Claimants’ Marvell shares, DeFoor told him his instructions came from ‘the top levels during Goldman’ in New York.” (Page 4, Weili Dai and Sehat Sutardja v. Goldman Sachs Co., Inc., et al.)
In a September 22, 2011 letter, Mary L. Schapiro, Chairman of a Securities and Exchange Commission, wrote: “There is now no order that requires a sale of shares in a domain criticism if a marketplace value of a shares falls next $5.00.” Chairman Schapiro’s minute was created in response to an inquiry from Congresswoman Anna Eshoo (D-CA).
UNLAWFUL RETITLING OF MARVELL SHARES: According to a FINRA Claim, in January, 2008, Goldman insisted Ms. Dai and Dr. Sutardja re-register 25,000,000 shares of Marvell batch into Goldman’s name, for a advantage of Ms. Dai and Dr. Sutardja, to secure a domain loan so that Dai could continue to squeeze shares on margin.
The FINRA Claim also alleges when shares of NVIDIA forsaken in July, 2008, Goldman requested even some-more shares owned by Ms. Dai and Dr. Sutardja in Marvell be re-registered in Goldman’s name for a advantage of Ms. Dai and Dr. Sutardja. Goldman positive Ms. Dai and Dr. Sutardja, as set onward in a FINRA Claim, that their Marvell batch was ideally protected as material and they would not have to sell it due to a domain loan. Based on Goldman’s assurances, Ms. Dai and Dr. Sutardja lay in a FINRA Claim that they re-registered another 3,100,000 shares of Marvell batch into Goldman’s name.
Without notice or agree from Ms. Dai or Dr. Sutardja, a FINRA Claim asserts Goldman re-titled tighten to 30,000,000 of their shares into Goldman’s name alone. The re-registration did not prove it was for a advantage of Ms. Dai and Dr. Sutardja. The claims of Ms. Dai and Dr. Sutardja embody allegations that this send was unapproved and totally nonessential since Ms. Dai and Dr. Sutardja had already affianced some-more than sufficient material for their bonds land with Goldman. According to their claims, Goldman’s solitary purpose in re-titling these Marvell shares was to emanate liquidity to expostulate their exclusive trade in Marvell shares, and their exchange with dependent sidestep supports in Marvell shares. As illustrated in their claims, a timing of these transfers indicates Goldman re-titled Ms. Dai and Dr. Sutardja’s Marvell shares, but their consent, as partial of a broader insider trade ring of that Ms. Dai and Dr. Sutardja now find themselves victims.
These problems with a re-titling of their shares in Goldman’s name were usually recently detected in April, 2011 by Ms. Dai and Dr. Sutardja. According to Ms. Dai and Dr. Sutardja, Goldman kept Claimants’ Marvell shares patrician in Goldman’s name years after they stopped trade on margin.
The FINRA Claim was filed by dual San Francisco area law firms, KEKER VAN NEST LLP and COTCHETT, PITRE McCARTHY, LLP – brought by John Keker and Joseph Cotchett. The fit seeks lapse of several hundreds of millions of dollars and punitive damages.
FOR THE FULL FINRA STATEMENT OF CLAIM, SEE www.cpmlegal.com
SOURCE Cotchett, Pitre McCarthy, LLP
Article source: http://www.africanbusinessreview.co.za/press_releases/founders-of-marvell-technology-group-are-among-the-largest-victims-of-greed-at-goldman-sachs