THE BLOG

New Evidence Strengthens Wall Street Suit

07/16/2010 06:54 pm ET | Updated May 25, 2011

The Goldman announcement of mistake and corrective measures are excellent new evidence of negligence, apart from the fraud we allege in my proposed State litigation. Goldman Sachs settled fraud allegations brought by the Securities and Exchange Commission. By paying over half a billion dollars to settle, Goldman Sachs avoided having to confess fraud. Goldman Sachs made an extraordinary concession that it "made a mistake" by not disclosing that the securities it sold were secretly designed by Paulsen and Co. to fail, not to make money for the innocent purchasers.
Goldman Sachs also outlined additional measures and claims it will now take to toughening oversight of mortgage securities, marketing materials and the employees who create or pitch.

Former Governor of Texas Mark White, who served also as Attorney General for the State of Texas, called on the Texas Attorney General to file suit on the strength of the week's developments, explaining: "Radnofsky's proposed State suit versus Goldman Sachs and other Wall Street firms is greatly aided by Goldman's concessions announced today. The State of Texas has suffered as a result of Wall Street negligence and fraud. And the harm to the State we love is physical as well as economic."

White continued, "Ms. Radnofsky's case is a much better case than the Tobacco litigation. Ms. Radnofsky is best known for her decades of work as a top defense lawyer. She understands and can prosecute better than any other lawyer on a major case of this size. Each State should follow suit to recover for the negligence and other misconduct of Wall Street."

Goldman's confession of mistake and changes in oversight of its securities and its employees are welcome new developments. A State can sue for negligence as well as fraud damages. The evidence of misconduct causing the economic collapse of September 2008 extends far beyond Goldman Sachs. The Wall Street Journal reports on July 16, 2010 that "many of the Goldman practices that were targeted by the Securities and Exchange Commission were used by other big Wall Street firms....some banks and other financial firms lost billions on the high stakes housing wagers, leading to taxpayer-funded bailouts."

In a July 6, 2010 press release, I pledged that as Attorney General, I would only use great lawyers willing to handle this case at no fee and the fine lawyers within the Attorney General's office.