INVESTMENT bank Goldman Sachs is being sued for billions of dollars in compensation after an institutional shareholder accused it of blindly “looting” the firm’s coffers by paying out rich rewards to its employees.
The lawsuit, which has been filed with the New York Supreme Court by the Security Police and Fire Professionals of America Retirement Fund, a minor shareholder in the bank, takes issue with the estimated $22bn (£13.6bn) “extravagant compensation bonanza” Goldman is on track to pay out this year.
The court filing claims the record revenues generated by the bank since the depths of the financial crisis last year have “not been the product of the skill and business acumen of the company’s employees, but [are] attributable directly to the multi-trillion dollar infusion of capital by the American taxpayers to bail out the entire financial services industry”.
The suit personally names as defendants Goldman’s chief executive Lloyd Blankfein, chief operating officer Gary Cohn, chief financial officer David Viniar and other directors of the bank, including steel magnate Lakshmi Mittal.
Jay Eisenhofer, managing director of New York law firm Grant & Eisenhofer, who will lead the litigation, said: “If it had not been for Goldman receiving Tarp money and funds that were used to bail out AIG – which together total over $20bn – the bank wouldn’t have made any money this year and possibly wouldn’t even have got through the year, full stop.”
The plaintiff has vowed to see the money ploughed back into the corporation if the case is successful.
Goldman Sachs spokesman Ed Canaday confirmed the bank would contest the lawsuit, which he said was “entirely without merit”.
The court case comes just days after Goldman revealed its top executives will receive their bonuses entirely in shares rather than cash this year to ward off criticism over its remuneration policy. The bank, which posted earnings of $3.2bn in the third quarter this year, has also given shareholders the right to have their say on its pay structure with a non-binding vote at its annual meeting in May.