Does God withhold Wells notices from shareholders?
If Lloyd Blankfein is doing God's work, then withholding Wells notices from shareholders must be a part of God's job responsibilities. Apparently, God failed to hide the notice well enough so Blankfein had to take on this task.
" Goldman Sachs Group Inc. was warned nine months ago that Securities and Exchange Commission staff wanted to bring a civil case against it, but the investment bank didn't specifically disclose this to investors in regulatory filings, Bloomberg News reported Saturday, citing unidentified people it credited with direct knowledge of the communications
Companies typically disclose legal issues such as regulatory probes in their quarterly and annual financial reports. If companies get Wells notices from the SEC, they often specifically disclose this, too. However, Goldman wasn't required to disclose the Wells notice if it believed it wasn't a material event. The notices don't always lead to charges or fines, a Wall Street Journal report noted.
"The question is whether a general disclaimer like that is rendered misleading because you left out the specifics," Adam Pritchard, a former SEC attorney, told Bloomberg News. "The prudent, conservative choice is to disclose more," because omissions can lead to shareholder lawsuits, Pritchard added.
Goldman's annual report for 2009, filed with the SEC in March, recycled a passage the company had used in the previous year's report to describe regulatory probes involving securities linked to subprime mortgages, Bloomberg reported. In both cases, the firm stated the following:
"GS&Co. and certain of its affiliates, together with other financial services firms, have received requests for information from various governmental agencies and self-regulatory organizations relating to subprime mortgages, and securitizations, collateralized debt obligations and synthetic products related to subprime mortgages. GS&Co. and its affiliates are cooperating with the requests."
Lucas van Praag, a spokesman for Goldman Sachs in New York, declined to comment to Bloomberg.
On Friday, Goldman had said the SEC's charges were "completely unfounded in law and fact," and the investment bank promised to "vigorously contest them and defend the firm and its reputation."
But Goldman may now face a raft of private lawsuits that could try to piggybank on the SEC's case, the Journal reported."