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Goldman faces fresh legal suit over its SEC disclosures

GOLDMAN Sachs faces fresh legal action after shareholders filed a suit against the bank over its investigation by the US Securities and Exchange Commission (SEC).

The class action, which was filed yesterday in the Southern District of New York Federal Court, accuses the bank of failing to notify shareholders that the SEC had issued Goldmans with a Wells notice – or notice of investigation – in 2009.

Shareholders complained they were unaware of the investigation into the bank’s use of the “Abacus” financial instrument, which was used to bet against sub-prime mortgage debt.

Star trader Fabrice Tourre has been named at the center of the investigation and the two counts of securities fraud brought against the bank by the SEC earlier this month.

Sam Rudman, David Walton, Darren Robbins and David Rosenfeld of law firm Robbins Geller Rudman & Dowd - one that acted for wronged Enron investors - are representing the plaintiffs. It is understood that two other class actions were filed last week in the New York Supreme Court. Goldman Sachs said the case was without merit.