SAN FRANCISCO, March 28, 2012 /PRNewswire/ – The founders of Marvell Technology Group (Nasdaq: MRVL), Dr. Sehat Sutardja and Ms. Weili Dai, are preparing to amend their claim filed with the San Francisco office of the Financial Industry Regulatory Authority (FINRA) against Goldman Sachs (NYSE: GS) and two account executives, alleging Goldman Sachs defrauded the two Silicon Valley executives of several hundreds of millions of dollars in the midst of the 2008 financial crisis.
At that time, Dr. Sutardja and Ms. Dai were two of the largest victims of fraud by Goldman’s Private Wealth Management Group. Today’s breaking news reveals there will be an amended FINRA Claim based on new evidence that Goldman Sachs engaged in secret re-titling into Goldman’s name alone of over 20 million shares owned by two founders of Marvell, Dr. Sutardja and Ms. Dai. In a series of transactions eerily similar to MF Global, currently under Congressional investigation for misusing client funds, the amended FINRA Claim will allege Goldman Sachs secretly instructed the stock transfer agent to obtain title to the Marvell shares only in Goldman Sachs’ name, without their clients’ permission.
Recent information revealed Goldman Sachs re-titled over 20 million shares of its clients’ Marvell stock so that, as will be asserted in the amended FINRA Claim, Goldman could trade on its own account, create a market for its affiliated hedge funds and, ultimately, recapitalize its accounts to be used to help save the Firm from financial ruin at the height of the 2008 financial crisis. In the midst of a financial crisis, the FINRA Claim contends Goldman put its own interests ahead of its clients’ interests.
The significance of Goldman’s re-registering shares then worth over $120 million dollars goes to Goldman’s motives behind the unlawful transfers. Under federal securities laws regulating short sales, before a short sale can be made, the shares must be borrowed. Often hedge funds pay brokerage firms such as Goldman Sachs to loan shares to the fund. By re-titling Claimants’ shares into Goldman’s name alone, Goldman created liquidity, i.e., it could trade, lend, and put up as collateral Claimants’ Marvell shares for Goldman’s own account, without Claimants’ consent, i.e. proprietary trading.
The FINRA Claim contends Goldman Sachs used the 2008 financial crisis to take advantage of Sehat Sutardja and Weili Dai. The FINRA filing asserts that in the wake of the 2008 financial crisis, Goldman Sachs was under great stress – incurring its first quarterly loss in its history ($2.1 billion, 4th quarter 2008) and losing two-thirds of its stock value in less than four months.
According to attorney Joseph Cotchett, “Through a series of extraordinary and deceitful acts geared to save Goldman Sachs at the expense of its clients, the FINRA Claim expressly alleges the firm used customer accounts to leverage its own profits without regard to the consequences to Sehat and Weili. Our clients became the victims of one of the largest acts of corporate greed and avarice in the history of our financial markets.”