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1KEKER
&
VANNESTLLPJOHNW.KEKER-#490922SUSANJ.HARRIMAN-#111703MICHAELD.CELIO-#1979983REIDP.MULLEN-#270671710SansomeStreet4SanFrancisco,CA94111-1704Telephone:(415)391-54005Facsimile:(415)397-7188Email:jkeker@kvn.com6sharriman@kvn.commcelio@kvn.com7rmullen@kvn.com8COTCHETT,PITRE
&
MCCARTHY,LLPJOSEPHW.COTCHETT-#363249PHILIP
L.
GREGORY-#95217NANCIE.NISHIMURA-#15262110MARYF.MOCK-#249379SanFranciscoAirportOfficeCenter11840MalcolmRoad,Suite200Burlingame,CA9401012Telephone:(650)697-6000Facsimile:(650)697-057713Email:jcotchett@cpmlegal.compgregory@cpmlegal.com14nnishimura@cpmlega1.commmock@cpmlegal.com15AttorneysforPlaintiffs16WEILlDAIandSEHATSUTARDJA171819SUPERIORCOURTOFTHESTATEOFCALIFORNIAINANDFORTHECOUNTYOF~ANFRANCISCO20WEILlDAIandSEHATSUTARDJA,Case~.
GC
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5
1
a,
02
212223Plaintiffs,
v.
GOLDMANSACHS
&
CO.;24BRADLEYDEFOOR;GRAHAMBRANDT;and25DOES1through20,inclusive,
26
Defendants.2728COMPLAINTFOR:(1)COMMONLAWFRAUD;(2)BREACHOFFIDUCIARYDUTY;(3)VIOLATIONSOFTHECONSUMERSLEGALREMEDIESACT(Civ.Code§1750etseq.);and,(4)UNFAIRCOMPETITION(Bus.
&
Prof.Code§17200etseq.)DEMANDFORJURYTRIAL
COMPLAINTCASENO.
 
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COMPLAINTCASENO.
I.INTRODUCTION
"Goldmanrepeatedlyputitsowninterestsandprofitsaheadoftheinterestsofitsclients."
4
SenatorCarlLevin
ChairofthePermanentSubcommitteeonInvestigationsoftheSenateHomelandSecurityandGovernmentalAffairsCommittee
5
6"[QJuestionshavebeenraisedthatgototheheartofthisinstitution'smostfundamentalvalue:howwetreatourclients."
7
8
9
LloydC.Blankfein
GoldmanSachs'sChiefExecutiveOfficer,attheFirm'sannualmeetinginMay,201010
11
121314
15
16
17
18
19
2021
22
23242526271.In2008,Goldmanmadeafirm-widedecisiontoputtheFirm'sinterestsaheadofitsclients.Seekingtoavoidthesevereeconomicenvironmentandrealizingitsbusinessmodelwasfailing,Goldmanmanipulatedthefinancialcrisisof2008totakeadvantageofitscorporateandindividualclients.Goldman's"businessmodelhascompletelyblurredthedifferencebetweenexecutingtradesonbehalfofcustomersversusexecutingtradesforthemselves.It'sahugeproblem."!Throughaseriesofextraordinaryanddeceitfulacts,gearedtosaveGoldmanatallcosts,theFirmuseditsclients'accountstoleverageitssuccess,makingunreasonablecollateralcallsonitsprivatewealthmanagementclients.Despitereceivinganinvestmentof$10billionasaparticipantintheUnitedStatesTreasury'sTARPCapitalPurchaseProgram,Goldmanforceditsclientstounnecessarilyliquidatetheirholdingsthroughforcedmargincalls,onlytorepurchasethesesameshareholdingsforaccountsownedbyGoldmananditsrelatedhedgefunds,somecurrentlyunderinvestigationbythefederalgovernment.Goldman'sfocuswastostrengthenitsbalancesheet,nomatterhowmanyrelationshipsweredestroyedintheprocess.TheconsequencestoGoldmanclients,suchasPlaintiffs,weredisastrous.Theybecamethevictimsofoneofthelargestactsofcorporategreedandavariceinthehistoryofourfinancialmarkets.28
1
NewYorkTimes,"ClientsWorriedAboutGoldman'sDuelingGoals,"May18,2010.
1
 
12.Goldmanistheworld'smostprominentinvestmentbank.
It
isaWallStreetgiantwith2reported2010revenueinexcessof$39billion-payingitsChiefExecutiveOfficer,Lloyd3Blankfein("Blankfein")19million..Amongotherthings,Goldmanprovides"wealth4managementservices,"managingtheinvestmentsofwealthyindividuals.Publicly,theFirmhas5adamantlyrepresenteditscoregoalisan"unwaveringcommitmenttoclientservice.,,2Goldman,6however,makesmostofitsmoneybytradingsecuritiesforitsownbenefit.Inthematters7describedherein,whenthesetwopartsofGoldman'sbusinessconflicted,Goldmanputitsown8interestsinmaximizingprofitsaboveitsfiduciaryobligationstoitsclients.93.ThecultureofcorruptionatGoldmanhasrecentlybeenrevealedthroughthemajor10insidertradingschemesofGalleonfounderRajRajaratnamandhisconnectionswithGoldman11throughformerGoldmandirectorRajatGupta.Accordingtotheallegationsmadebythe12SecuritiesandExchangeCommission,whileservingasaGoldmandirector,Guptarepeatedly13passedinsiderinformationfromGoldmandirectormeetingstoRajaratnam.144.Thegovernment'scasesagainstRajaratnamandGuptaarethetipoftheiceberg.15Federalprosecutorshavealsobroughtchargesagainstindividualsassociatedwithanexpert16networkingfirm,PrimaryGlobalResearch.AmongtheactionsfiledbytheDepartmentof17JusticeisthecriminalcaseagainstSamirBaraiandWinifredJiau.ThegovernmentclaimsBarai18andJiaucommittedsecuritiesfraudwhentheydiscussedmaterial,insideinformationabout,19amongothercompanies,MarvellTechnologyGroup,Ltd.("Marvell"),apubliccompanythat20tradesovertheNASDAQ.ThegovernmentassertsBaraicausedahedgefund,whichPlaintiffs21areinformedandbelieveisassociatedwithGoldmanSachs,topurchaseover200,000sharesof22Marvellstock.TherelevanttimeperiodofBaraiandJiau'scasescoincidewiththetimeframeof23theinstantaction.245.Insidertradingisnotavictimlesscrime.Shareholdersinthecompaniessubjecttothe25insidertradessufferedduetoimproperdisclosures.Stockpricesweremanipulatedtotipoff26selectedinvestorsandhedgefundsattheexpenseofothers.Theimpropertradescaused27significantmovementinstockprices.Specificpubliccompaniesweretargetedbytheseinsider282GoldmanFourthQuarter2009EarningsCall.January21,2010.
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