Thursday, April 05, 2012

Couple says Goldman Sachs misused shares to assist short-sellers

Silicon Valley entrepreneurs say they were mistreated by Goldman, joining other critics of the firm.

FORTUNE -- Two Silicon Valley entrepreneurs suing Goldman Sachs say the Wall Street firm mislabeled shares in the couple's brokerage account in order to be able to assist short-sellers who were betting against the company the couple founded.

A lawyer for the couple, Sehat Sutardja and Weili Dai, co-founders and executives of the semiconductor company Marvell Technologies (MRVL), said the claim will be added Tuesday to a complaint the the couple filed with the Financial Industry Regulation Authority earlier this month. The couple sued Goldman a year ago in a San Francisco court. That case was thrown out and lead the couple to resurface their suit as a FINRA complaint set to go to arbitration. Sutardja is the CEO of Marvell. Dai is the company's manager of communications.

The suit claims that Goldman cost the married couple $100 million by duping them into selling a portion of their Marvell shares to cover a margin loan at the height of the financial crisis. "Goldman had no legal right to lend out shares that didn't belong to the firm," says Phil Gregory of Cotchett, Pitre & McCarthy, who is representing Sutardja and Dai. "This whole case is about Goldman trying to make Goldman look better, and my clients suffering for it."

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