Goldman Sachs 2015 Annual Report Download - page 215

THE GOLDMAN SACHS GROUP, INC. AND SUBSIDIARIES
Notes to Consolidated Financial Statements
Financial Advisory Services. Group Inc. and certain of its
affiliates are from time to time parties to various civil
litigation and arbitration proceedings and other disputes
with clients and third parties relating to the firm’s financial
advisory activities. These claims generally seek, among
other things, compensatory damages and, in some cases,
punitive damages, and in certain cases allege that the firm
did not appropriately disclose or deal with conflicts of
interest.
Credit Derivatives Antitrust Matters. On
December 4, 2015, the European Commission announced
that it had closed antitrust proceedings against all banks,
including Group Inc., involved in the European
Commission’s investigation, announced in April 2011, of
numerous financial services companies in connection with
the supply of data related to credit default swaps and in
connection with profit sharing and fee arrangements for
clearing of credit default swaps, including potential anti-
competitive practices.
GS&Co. is among the numerous defendants in putative
antitrust class actions relating to credit derivatives, filed
beginning in May 2013 and consolidated in the U.S.
District Court for the Southern District of New York. On
October 29, 2015, the court preliminarily approved the
settlement among GS&Co. and the plaintiffs. The firm has
reserved the full amount of the proposed settlement.
Libya-Related Litigation. GSI is the defendant in an
action filed on January 21, 2014 with the High Court of
Justice in London by the Libyan Investment Authority,
relating to nine derivative transactions between the plaintiff
and GSI and seeking, among other things, rescission of the
transactions and unspecified equitable compensation and
damages exceeding $1 billion. On December 4, 2014, the
Libyan Investment Authority filed an amended statement of
claim.
Municipal Securities Matters. GS&Co. (along with, in
some cases, other financial services firms) is named by
municipalities, municipal-owned entities, state-owned
agencies or instrumentalities and non-profit entities in a
number of FINRA arbitrations and federal court cases
based on GS&Co.’s role as underwriter of the claimants’
issuances of an aggregate of approximately $1.9 billion of
auction rate securities from 2003 through 2007 and as a
broker-dealer with respect to auctions for these securities.
The claimants generally allege that GS&Co. failed to
disclose that it had a practice of placing cover bids in
auctions, and/or failed to inform the claimant of the
deterioration of the auction rate market beginning in the
fall of 2007, and that, as a result, the claimant was forced to
engage in a series of expensive refinancing and conversion
transactions after the failure of the auction market in
February 2008. Certain claimants also allege that GS&Co.
advised them to enter into or continue with interest rate
swaps in connection with their auction rate securities
issuances, causing them to incur additional losses. The
claims include breach of fiduciary duty, fraudulent
concealment, negligent misrepresentation, breach of
contract, violations of the Exchange Act and state securities
laws, and breach of duties under the rules of the Municipal
Securities Rulemaking Board and the NASD. Certain of the
arbitrations have been enjoined in accordance with the
exclusive forum selection clauses in the transaction
documents. In addition, GS&Co. has filed motions with the
FINRA Panels to dismiss the arbitrations, one of which has
been granted, and has filed motions to dismiss two of the
proceedings pending in federal court, one of which was
granted but has been appealed and one of which was
denied. GS&Co. has also reached settlements or settlements
in principle in five actions and one action was voluntarily
dismissed.
U.S. Treasury Securities-Related Litigation. GS&Co. is
among the primary dealers named as defendants in several
putative class actions relating to the market for U.S.
Treasury securities, filed beginning in July 2015 and
consolidated in the U.S. District Court for the Southern
District of New York. The complaints generally allege that
the defendants violated the federal antitrust laws and the
Commodity Exchange Act in connection with an alleged
conspiracy to manipulate the when-issued market and
auctions for U.S. Treasury securities, as well as related
futures and options, and seek declaratory and injunctive
relief, treble damages in an unspecified amount and
restitution.
Goldman Sachs 2015 Form 10-K 203