Germany vs. Goldman Sachs: Government Considering Legal Action Against Company

BERLIN — The German government may consider taking legal action in a case in which Goldman Sachs & Co. is accused of defrauding investors, a newspaper reported Saturday.

The U.S. government alleges Goldman Sachs sold mortgage investments without telling buyers they were crafted with input from a client who was betting on them failing.

Buyers included German bank IKB Deutsche Industriebank AG – an early victim of the financial crisis that was rescued by the state-owned KfW development bank among others.

The Welt am Sonntag newspaper quoted Chancellor Angela Merkel's spokesman, UIrich Wilhelm, as saying that German regulator BaFin will ask the U.S. Securities and Exchange Commission for information.

"After a careful evaluation of the documents, we will examine legal steps," he said, according to the report.

There was no immediate confirmation from the government.

IKB spokeswoman Annette Littmann said the bank is aware of the charges filed by the SEC, but declined to comment further.

The SEC says IKB lost nearly all its $150 million investment.

IKB issued a profit warning in 2007, saying it had been hurt by U.S. subprime mortgage investments. IKB was sold in 2008 to Dallas-based Lone Star Funds.

Comments

[elkhornbob]

05:52 PM on 04/20/2010

Use the following link to contact Germany's BaFin and encourage them to continue their investigation of Sachs: http://www.bafin.de/cln_152/nn_720778/EN/Service/Contact/contact__node.html?__nnn=true

[LMPE]

09:28 PM on 04/19/2010

It's Greece that should get to go after Goldman Sachs. GS played a role in ruining the Hellenic Republic's economy. Not only would Greece get to stick it to GS, they could proudly say "The Greeks invented prosecution of Goldman Sachs!"

[cornsilk]

03:27 PM on 04/19/2010

As an expat native Manhattanite living in Germany, I can say with conviction that the leaders here will have some serious influence in pursuing Goldman Sachs consequences and legal prosecutions. Goldman Sachs quant guys structured complicated derivative instruments in Greece, ultimately resulting in anarchy and riots and disaster in Greece at the moment. Who has to bail them out, the rest of Europe, especially German and the UK are not going to let this fall of their radar. Unlike the dumb fox W and his mastermind Paulson and rock scientist Geithner, big business lobbyists don't easily exist in politicians pockets over here. Obama seems to know this. Goldman is in big trouble and I cannot fathom how the stock is trading up in the positive territory today. It's like Bear Stearns all over, the writing was on the wall but the stock continued to trade up.. until it fell right through it's own floor.

[rudolph]

03:14 PM on 04/19/2010

Perhaps the Europeans will take the legislative measures our government is too weak to pass.

[WhatACountry]

11:25 AM on 04/19/2010

Goldman Sachs needs to beld accountable.
I hope legal action does not stop with Chancellor Merkel, but becomes a joint effort with other countries affected by the deliberate deceipt of this institution.

[SangZe]

10:18 AM on 04/19/2010

Sehr gut!

[Rock Brasiliano]

07:20 AM on 04/19/2010

A career politicians like Obama have no knowledge of economics and as a result have to surround themselves with self-serving financial experts. People truly get the government they deserve.

[progressivegreg]

09:42 AM on 04/19/2010

NO we did not Deserve Bush (shrub) he was foisted on us by an activist supreme court!

[Atlanta Dave]

10:44 AM on 04/19/2010

Okay, the subject is Wall Street thievery committed long before Obama was elected. Your comment is completely irrelevant. If hating Obama is all you bring to the conversation, I think you're late for a tea party somewhere.

[Macready]

05:25 AM on 04/19/2010

do it Angela . . . hit them hard!

[NomadicView]

04:27 AM on 04/19/2010

Genuine question: So far, the list of investigations of fraud is shaping up as the United States, Scotland and/or England, and Germany. Nothing is certain at the moment, I know.

How will the investigation of fraud related to Goldman Sachs allegedly using false exchange rates to hide Greek debt be handled? Surely not by the Greek government. EU?

http://www.spiegel.de/international/europe/0,1518,676634,00.html

Wonder if we can expect further revelations from the Asian side as well?

[VS007]

01:08 AM on 04/19/2010

Go ahead Germany,France,UK.
I have more hope in EU coming out with a reform with teeth than from US with the rethuglicans bought off by the Wall St.

[banker67]

01:13 AM on 04/19/2010

Because these banks are international, it will take a concerted international effort to return some trace of political control to world governments.
Remember, there are a handful of banks called custodial banks with trillions in cash. I believe I read a story a few years ago reporting that just one of these virtually unheard-of banks controls some seven trillion in highly liquid currency. You can imagine how much that kind of financial muscle cares about representative democracy, national sovereignty, laws and justice.

[bascombe]

02:13 AM on 04/19/2010

and remember that the DLC president and his DSCC/DCCC cronies in congress are talking a good game now. When that bill gets close to the finish, I expect Dudd and OHoover to strip out the real protections and and real regulations. As written so far, the bill guarantees tyhat no competition will emerge for those 'too big to fail' companies that caused this disaster in the first place.

[Jolimont]

11:35 PM on 04/18/2010

Right on Germany!

[CFL68]

11:20 PM on 04/18/2010

That would be nice if Germany nailed someone to wall over this.

Deutschland uber alles!!!

Woo hooo!

[floodberg]

11:08 PM on 04/18/2010

Did anyone catch that IKB was bought by Lone Star? Grayken, the CEO, is formerly of JPMorgan/Morgan Stanley. Will wonders never cease?

[FHTB]

10:58 PM on 04/18/2010

I like Angela...she's a tough cookie who doesn't put up with BS from ANYBODY...including Obama when he wanted Germany to join the bailout party...glad she and Sarkozy hung tough on that.

[Ergon]

09:42 PM on 04/18/2010

FIRST they had to prosecute Bishop Williamson, THEN they'll get around to Goldman Sachs. Nice to know they've got their priorities in order.