Goldman Sachs 2012 Annual Report Download - page 213

Notes to Consolidated Financial Statements
Research Investigations. From time to time, the firm is
the subject of or otherwise involved in regulatory
investigations relating to research practices, including
research independence and interactions between research
analysts and other firm personnel, including investment
banking personnel. It is the firm’s practice to cooperate
fully with any such investigations.
EU Price-Fixing Matter. On July 5, 2011, the European
Commission issued a Statement of Objections to Group Inc.
raising allegations of an industry-wide conspiracy to fix
prices for power cables, including by an Italian cable
company in which certain Goldman Sachs-affiliated
investment funds held ownership interests from 2005 to
2009. The Statement of Objections proposes to hold Group
Inc. jointly and severally liable for some or all of any fine
levied against the cable company under the concept of
parental liability under EU competition law.
Municipal Securities Matters. Group Inc. and certain of
its affiliates are subject to a number of investigations and
reviews by various governmental and regulatory bodies and
self-regulatory organizations relating to transactions
involving municipal securities, including wall-cross
procedures and conflict of interest disclosure with respect
to state and municipal clients, the trading and structuring of
municipal derivative instruments in connection with
municipal offerings, political contribution rules,
underwriting of Build America Bonds and the possible
impact of credit default swap transactions on municipal
issuers. Goldman Sachs is cooperating with the
investigations and reviews.
Group Inc., Goldman Sachs Mitsui Marine Derivative
Products, L.P. (GSMMDP) and GS Bank USA are among
numerous financial services firms that have been named as
defendants in numerous substantially identical individual
antitrust actions filed beginning on November 12, 2009
that have been coordinated with related antitrust class
action litigation and individual actions, in which no
Goldman Sachs affiliate is named, for pre-trial proceedings
in the U.S. District Court for the Southern District of New
York. The plaintiffs include individual California municipal
entities and three New York non-profit entities. All of these
complaints against Group Inc., GSMMDP and GS Bank
USA generally allege that the Goldman Sachs defendants
participated in a conspiracy to arrange bids, fix prices and
divide up the market for derivatives used by municipalities
in refinancing and hedging transactions from 1992 to 2008.
The complaints assert claims under the federal antitrust
laws and either California’s Cartwright Act or New York’s
Donnelly Act, and seek, among other things, treble
damages under the antitrust laws in an unspecified amount
and injunctive relief. On April 26, 2010, the Goldman
Sachs defendants’ motion to dismiss complaints filed by
several individual California municipal plaintiffs was
denied. On August 19, 2011, Group Inc., GSMMDP and
GS Bank USA were voluntarily dismissed without prejudice
from all actions except one brought by a California
municipal entity.
On August 21, 2008, GS&Co. entered into a settlement in
principle with the Office of the Attorney General of the
State of New York and the Illinois Securities Department
(on behalf of the North American Securities Administrators
Association) regarding auction rate securities. Under the
agreement, Goldman Sachs agreed, among other things,
(i) to offer to repurchase at par the outstanding auction rate
securities that its private wealth management clients
purchased through the firm prior to February 11, 2008,
with the exception of those auction rate securities where
auctions were clearing, (ii) to continue to work with issuers
and other interested parties, including regulatory and
governmental entities, to expeditiously provide liquidity
solutions for institutional investors, and (iii) to pay a
$22.5 million fine. The settlement is subject to approval by
the various states. GS&Co. has entered into consent orders
with New York, Illinois and most other states and is in the
process of doing so with the remaining states.
On September 4, 2008, Group Inc. was named as a
defendant, together with numerous other financial services
firms, in two complaints filed in the U.S. District Court for
the Southern District of New York alleging that the
defendants engaged in a conspiracy to manipulate the
auction securities market in violation of federal antitrust
laws. The actions were filed, respectively, on behalf of
putative classes of issuers of and investors in auction rate
securities and seek, among other things, treble damages in
an unspecified amount. Defendants’ motion to dismiss was
granted on January 26, 2010. On March 1, 2010, the
plaintiffs appealed from the dismissal of their complaints.
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