Goldman Sachs CEO Shows Signs of Fear, Hires High-Profile Defense Attorney
Reid Weingarten, a high-profile Washington defense attorney, has been hired by Goldman Sachs's chief executive officer, Lloyd Blankfein.
Reuters has the exclusive, reporting that Blankfein, who is in his sixth year as the CEO of America's largest investment bank, has spent the last two years evading accusations of fraud and conflicts of interest.
Blankfein isn't the only one. His company has been running into trouble for quite some time, with Overstock.com (NASDAQ: OSTK) CEO Patrick Byrne leading the charge in making serious allegations against the firm. While Goldman Sachs (NYSE: GS) settled with the SEC for $550 million last year, Blankfein appears to be getting prepared for another set of charges.
"Why do you bring in someone like that?" the source, who was not authorized to speak publicly, told Reuters. "It says one thing: that they're taking it seriously."
However, Blankfein has yet to be charged in any civil or criminal case.
Weingarten, who is a partner with Steptoe & Johnson LLP, has represented a number of high-profile clients in criminal cases, including WorldCom chief Bernard Ebbers (who was later convicted) and Enron accounting officer Richard Causey, who pleaded guilty in exchange for a five- to seven-year prison term. According to Reuters, he won the acquittal of Lauren Stevens, a former GlaxoSmithKline (NYSE: GSK) lawyer, who was accused of lying and obstructing a probe into the company's marketing process.
While Weingarten's resume is impressive, there may not be any lawyer that's powerful enough to contain the controversy that surrounds Blankfein and Goldman Sachs. After the credit crisis, Goldman Sachs was accused of favoring some clients over other investors; other times, the investment bank was said to have traded against the interest of clients.
Reuters reiterated some of the troubles Goldman Sachs faced last April, in which the Senate's Permanent Subcommittee on Investigations released a “scathing report that criticized Goldman for ‘exploiting' clients by unloading subprime exposure onto unsuspecting clients in 2006 and 2007, and concluded that its top executives misled Congress during testimony in 2010.”
Not surprisingly, Goldman Sachs said that it disagreed with many of the report's conclusions.
The battle continued last June when New York prosecutors subpoenaed the bank to, as Reuters puts it, “explain some of its actions in the run-up to the financial crisis.” Goldman Sachs is also the target of probes by the Securities and Exchange Commission, the Justice Department, and the New York Attorney General.
Late this afternoon, Goldman Sachs released a statement confirming that its CEO had hired a criminal defense attorney:
“As is common in such situations, Mr. Blankfein and other individuals who were expected to be interviewed in connection with the Justice Department's inquiry into certain matters raised in the PSI report hired counsel at the outset.”
At press time, Goldman Sachs was at $106.38 in after hours trading. Before the statement was released, shares had been trading as low as $103.75 in after hours trading.
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