Interesting lawsuit filed against the great vampire squid wrapped around the face of humanity. I think taxpayers should have standing to contest these kinds of payments as well. – Ilene
Institutional Investor Sues Goldman Sachs, Alleging Excessive Bonus Packages Are Improper
Complaint by Security Police and Fire Professionals of America Retirement Fund names CEO Lloyd Blankfein, COO Gary Cohn and company board members; says 2009 performance attributable to government bailout not employee performance
NEW YORK, Dec. 14 /PRNewswire/ — A U.S. pension fund has filed a lawsuit against Goldman Sachs Group, Inc., alleging that the impending record-setting 2009 compensation payouts, estimated to be in excess of $22 billion, are not based on the hard work of the executives. Instead, the plaintiffs contend, the payouts are based on a trillion dollar investment made by the American taxpayers that was meant to stabilize the financial industry.
The suit was brought in New York Supreme Court by the Security Police and Fire Professionals of America Retirement Fund. The plaintiffs accuse Goldman’s board of directors of breaching their fiduciary duties by failing to administer the company’s compensation plans in the best interests of the company and its shareholders.
The lawsuit was filed by leading shareholder and corporate governance law firm Grant & Eisenhofer.
According to the complaint, Goldman’s board routinely pays out half of its reported annual net revenue as compensation without regard to whether its results were attributable to the productivity and performance of the company’s employees. Many of its shareholders have objected to the enormous bonus pool contemplated for 2009.
Goldman’s 2009 Results Largely Based on Taxpayer Funds
Goldman earns its revenue from four areas: investment banking, trading and principal investments, asset management and securities services, and net interest income. Over the years, the company has become increasingly dependent on trading activities to generate firm revenues.
During the midst of the credit-crisis, Goldman accepted a $10 billion TARP loan. Additionally, in the fall of 2008, the Federal Deposit Insurance Company enabled Goldman to generate $29 billion in cash by issuing FDIC insured debts through the Temporary Liquidity Guarantee Program.
Further, Goldman received federal funds from contractual counterparties who used federal funds to pay their obligations to Goldman. Most notably, the company received an astounding $13 billion of taxpayer money when insurance giant AIG used TARP funds to satisfy certain financial contracts with Goldman.
Note: Grant & Eisenhofer P.A. represents institutional investors and shareholders internationally in securities class actions, corporate governance actions and derivative litigation. The firm has recovered more than $12 billion for investors in the last five years. G&E has also been selected among The National Law Journal’s "Plaintiffs’ Hot List" for the past five years, and is a member of its Hall of Fame. Risk Metrics named Grant & Eisenhofer the Number 1 law firm in average shareholder recoveries in securities class actions in 2007 and 2008. For more information, visit www.gelaw.com.
Source: Grant & Eisenhofer
Web Site: http://www.gelaw.com/
Artwork: Photobucket, by Cindyville_photo.
