The lawsuits filed April 22 in New York State Supreme Court name Lloyd Blankfein and the firm's entire board of directors as defendants. The suits follow civil fraud charges filed last week by the Securities and Exchange Commission over the same investments.
The bank told the SEC May 10 that it expects more litigation over its collateralized debt obligations. The two parties also are said to be in preliminary settlement talks.The SEC says Goldman committed fraud by failing to disclose important information about the securities that might have scared off investors.
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The two suits, filed by shareholders Robert Rosinek and Morton Spiegel, accuse Blankfein and other officers of "systematic failure" over 3.5 years for not properly vetting 23 mortgage-linked deals at the center of the SEC suit. Those deals, called Abacus, led to $1 billion in losses.
The plaintiffs seek unspecified monetary damages.
Despite these woes, D&O liability insurance experts do not foresee any major widespread uplift in D&O insurance prices emerging from Goldman Sachs' current actions or the increased lawsuit activity that has been provoked.
Previous to these lawsuits, Goldman Sachs reported a "perfect quarter" for the period ended March 31. Traders did not lose any money at the end of each trading day during the first quarter, a first for the firm.
