Technology Executives Sue Goldman Sachs Over Margin Fraud (GS, MRVL)

Two co-founders of Marvell Technology Group

are suing Goldman Sachs

, alleging that the bank finagled them into selling company shares in order to cover a margin loan. “Goldman forced its clients to unnecessarily liquidate their holdings through forced margin calls, only to repurchase these same shareholdings for accounts owned by Goldman and its related hedge funds,” according to the complaint. Marvell Technology Group Ltd. is a fabless semiconductor provider of application-specific standard products. The company develops complex system-on-a-chip (SoC) devices using its technology portfolio of intellectual property in the areas of analog, mixed-signal, digital signal processing and embedded advanced RISC machine (

)-based microprocessor integrated circuits. A Bloomberg report notes that "Sehat Sutardja, Marvell's chief executive officer, and Weili Dai, the company's former chief operating officer, said they were duped into selling shares in 2008 that are now worth $141.5 million, according to a complaint filed yesterday in state court in San Francisco. Goldman Sachs pressured them by claiming a regulatory rule, which didn't exist, required them to sell their stock, according to the complaint. Goldman Sachs held millions of shares of Marvell stock in 2008, they said." The complaint further alleges that Goldman forced a sale of Sutardja and Dai's shares of Nvidia Corp.

, creating a loss of $166 million. The lawsuit is filed under California's unfair competition and the state's Consumers Legal Remedies Act. Shares of Marvell lost $0.34 Tuesday, or 2%, to close at $16.05. Goldman Sachs stock gained $0.51 to finish at $161.47.