Goldman Sachs

Goldman Sachs Under Investigation by SEC Over ESG Funds

Published on: July 1, 2022 | by Shepherd Smith Edwards & Kantas, LLP

Did The Firm Misrepresent Environmental, Social, and Governance Qualifications in Marketing Materials?

According to The Wall Street Journal, sources say that The US Securities and Exchange Commission (SEC) is investigating Goldman Sachs Group Inc. The investigation includes certain funds that utilize environmental, social, and governance (ESG) criteria. ESG investing considers these three factors when assessing an investment’s overall impact and financial returns.

Goldman Sachs’s mutual fund business oversees at least four funds with ESG or clean energy in their names. The SEC is reportedly examining these investments in terms of their environmental, social, and governance criteria and metrics that marketing materials tout them to have.

Puerto Rico Retiree Plan Accuses UBS and Others of Bond Price Rigging

Published on: April 29, 2019 | by Shepherd Smith Edwards & Kantas, LLP

The Puerto Rico Government Employees and Judiciary Retirement Systems Administration, a pension plan for retirees of the U.S. territory’s government, has filed a proposed securities class action in federal court against Bank of America (BAC), Goldman Sachs (GS), Citigroup (C), Barclays Capital, Inc. (BARC), BNP Paribas Securities Corp., Bank of America Securities, Credit Suisse Securities, FTN Financial Securities, Deutsche Bank Securities, JP Morgan Securities, Morgan Stanley (MS), Merrill Lynch, Pierce, Fenner & Smith, and UBS Securities. The retirement fund is accusing the defendants of rigging bond prices to keep the prices up on Freddie Mac and Fannie Mae bonds.

Freddie and Fannie, both U.S. government-sponsored entities (GSEs), offer bonds to raise money for loans. According to the Puerto Rico pension plan’s bond fraud case, the trading desks of the various banks worked together to artificially raise the prices of the GSE bonds when the market took a hit after the 2008 financial crisis and Fannie and Freddie started reducing the number of bonds issued for sale. This decrease led to a loss in profits for those underwriting and trading in Fannie Mae and Freddie Mac bonds. The plaintiff contends that instead of the banks opting to lower the difference between their purchasing and selling prices and competing for clients, they worked together to fix the bond prices so they could “maximize” their profits at the expense of customers.

The Puerto Rico retirement plan’s complaint comes weeks after another proposed class action was brought by two other pension funds also accusing banks of rigging the price of GSE bonds. The pension fund plaintiffs in that fraud case are the Trust and Sheet Metal Workers’ Local 19 Pension Fund and the Dallas Area Rapid Transit Employees’ Defined Benefit Retirement Plan. The defendants are Bank of America NA, Barclays Capital, Wells Fargo Securities, LLC, Citigroup Global Markets, Inc., BNP Paribas Securities Corp., Deutsche Bank Securities, JPMorgan Securities, HSBS Bank Plc, HSBC Securities, JP Morgan Chase Bank, TD Securities, Nomura Securities International Inc., and Merrill Lynch, Pierce, Fenner & Smith.

Big Banks Are Accused of Rigging Freddie Mac and Fannie Mae Bonds

Published on: February 27, 2019 | by Shepherd Smith Edwards & Kantas, LLP

The City of Birmingham Retirement and Relief System and the Electrical Workers Pension System Local 103 have filed a proposed class action securities fraud lawsuit accusing a number of big banks of colluding with one another to rig the prices of Federal Home Loan Mortgage Corp. (Freddie Mac) and Federal National Mortgage Association (Fannie Mae) unsecured bonds. The defendants in the case include JP Morgan (JPM), Bank of America (BAC), Citigroup (C), Barclays Bank (BARC), Deutsche Bank (DB), Credit Suisse (CS), UBS (UBS), Merrill Lynch, BNP Paribas Securities Corp., FTN Financial Securities, Goldman Sachs (GS), and First Tennessee Bank.

According to Law360, the plaintiffs contend that the bank took advantage of the dark market nature of the “private, ‘over the counter’ (OTC) market” where these bonds are bought and sold to get investors to buy the Freddie Mac and Fannie Mae bonds at prices that were “artificially high.”

Fannie and Freddie are both government-backed mortgage-finance companies. They are typically known for converting mortgages into mortgage-backed securities. This investor fraud lawsuit, however, is focused on their unsecured bonds. The proposed class contends that investors purchased the bonds because they thought they were safe, liquid, low risk, and likely to make returns. Their complaint states that the plaintiffs and other investors had not expected the “overcharges and underpayments” that resulted because of the banks’ alleged collusion.

Philadelphia Sues Citigroup, Goldman Sachs, Bank of America and Other Big Banks, Alleges Municipal Bond Rigging

Published on: February 21, 2019 | by Shepherd Smith Edwards & Kantas, LLP

The city of Philadelphia, Pennsylvania is suing Bank of America (BAC), Goldman Sachs (GS), Citigroup (C), Wells Fargo & Co. (WFC), Barclays Plc (BAR), JPMorgan Chase & Co. (JPM), and Royal Bank of Canada (RBC) for allegedly rigging rates for variable-rate demand obligations (VRDOs). Philadelphia had issued over $1.6B of these bonds.

VRDOs are tax-exempt municipal securities that can be redeemed by investors early because they are tendered to banks. The banks can then remarket the bonds to other investors while charging issuers a fee.

According to InvestmentNews, the city is looking to represent a number of hospitals, municipalities, and universities with its lawsuit. The complaint contends that the banks worked with each other to manipulate the VRDO rates in secret so they could make hundreds of millions of dollars in unearned fees. The alleged rigging occurred between 2/2008 and 6/2016. The collusion purportedly involved the banks agreeing not to compete against each other for re-marketing services.

Big Banks End 2018 Holding At Least $1.6B of Unsold Loans Involving Leveraged Buyout Debt

Published on: December 31, 2018 | by Shepherd Smith Edwards & Kantas, LLP

According to Bloomberg, market woes have left Goldman Sachs Group Inc. (GS), Barclays Plc (BARC), Bank of America Corp. (BAC), and other Wall Street banks unable to get rid of at least $1.6B of “unwanted leveraged buyout debt” as investors continue to run from high-risk assets in the wake of fears about the global economy. A leveraged buyout (LBO) involves the acquiring of a company using borrowed funds. The assets of the company that is acquired, as well as the acquiring company’s assets, usually serve as collateral. LBOs make it possible for companies to get involved in big acquisitions without having to use a lot of capital.

Bloomberg reports that as of the 22nd of December, at least four loan sales involving acquisitions and buyouts had yet to “clear the market” leaving banks with no choice but to retain the debt on their books, including:

· A group led by Goldman Sachs in charge of the financing for First Reserve’s acquisition of pipeline operator Blue Racer was expected to end the year holding a $516M loan.

Financial Firm News: Goldman Sachs Faces Criminal Fraud Charges in Malaysia and UBS is Fined $15M Over Poor Anti-Money Laundering Detection Systems and Multibillion-Dollar Fraud Involving 1MDB Fund Leads to Criminal Charges for Goldman

Published on: December 20, 2018 | by Shepherd Smith Edwards & Kantas, LLP

Prosecutors in Malaysia have filed criminal charges against a number of Goldman Sachs Group Inc. (GS) units and several people over a massive multibillion-dollar bond fraud involving the sovereign wealth fund the 1Malaysia Development Berhad (1MDB). The individuals charged including former Goldman managing directors Roger Ng Chong Hwa and Tim Leissner, financier Jho Low, who is accused of masterminding the fraud, and ex-1MDB general counsel Jasmine Loo Ai Swan.

Malaysia Attorney General Tuan Tommy Thomas said that the criminal charges are related to fake and misleading statements issued in order to steal $2.7B from the proceeds of three 1MDB subsidiary issued-bonds. The bonds, which Goldman organized and underwrote, were valued at over $6B.

The defendants are accused of conspiring together to bribe public officials in Malaysia so as to allow for Goldman’s involvement with the bonds. The investment bank earned about $600M in fees for its work with the Malaysian sovereign fund.

SEC Headlines: Regulator Probes Oppenheimer Executive, Prepares Insider Trading Case Against Policy Research Firm, & Wants to Suspend Standard & Poor’s From Rating CMBSs

Published on: December 10, 2014 | by Shepherd Smith Edwards & Kantas, LLP

SEC Investigating Ex-Oppenheimer Executive for Securities Law Violations

According to Bloomberg.com, Robert Okin, Oppenheimer & Co.’s (OPY) former retail brokerage head, is under investigation by the Securities and Exchange Commission. In October, the agency’s enforcement division notified Okin that, based on a preliminary determination, it intended to file charges against him for securities law violations, including failure to supervise.

Okin is no longer with Oppenheimer. He resigned earlier this month to pursue “other interests.” Okin denies violating the Securities Exchange Act.