Enron law firm sues Goldman Sachs

By Annalyn Censky, staff reporter


NEW YORK (CNNMoney.com) -- The law firm that won Enron investors $7.2 billion in what was one of the largest class action suits in the history of securities law filed charges against Goldman Sachs on Monday.

Robbins Geller Rudman and Dowd filed the lawsuit in U.S. district court in Manhattan, aiming to recover investors' losses stemming from the fraud charges issued earlier this month by the Securities and Exchange Commission.

The suit, which currently names investors Howard Sorkin, Ilene Richman and "all other similarly situated" as the plaintiffs, is seeking class-action status.

It charges Goldman Sachs, as well as C-suite members CEO Lloyd Blankfein, CFO David Viniar, and President and COO Gary Cohn, with deceiving investors about the bank's financial conditions.

The complaint alleges that by failing to disclose conflicts in the sale of ABACUS 2007-AC1 -- the now-famed financial portfolio at the center of the SEC's charges -- Goldman Sachs caused investors to purchase the stock at artificially inflated prices.

The lawsuit seeks to represent investors who bought shares between October 15, 2009 -- when Goldman Sachs announced its 2009 third-quarter results -- and April 16, the date of the SEC's fraud charges. The complaint said that during that time, the investment bank failed to reveal that it had received a so-called Wells notice, a letter from the SEC indicating the federal regulator intended to enforce charges against the ABACUS deal.

"Goldman chose not to issue a Form 8-K alerting investors to this event and later even omitted this information from its Form 10-Qs," the case said. "As a result, investors were unaware the SEC was even investigating ABACUS 2007-AC1."

Shares of Goldman Sachs traded at $188.63 on October 15, the start date mentioned in the lawsuit.

On April 15, the day before the SEC filed fraud charges, the stock closed at $184.27. After news of the SEC's fraud charges hit headlines, they plummeted 12.8% in one day, to close at $160.70 per share on April 16.

Robbins Geller issued a press release Monday, announcing the suit and seeking other Goldman Sachs investors to join what it hopes will become a class action suit. The San Diego-based firm was previously called Coughlin Stoia Geller Rudman and Robbins when it represented Enron investors.

A spokesman for Goldman Sachs didn't immediately return a message seeking comment.

The Robbins Geller case is the third complaint filed against Goldman Sachs since the SEC filed its fraud charges against the firm. Investors Robert Rosinek and Morton Spiegel both filed lawsuits on FridayTo top of page

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