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Goldman falls on news that CEO hired top lawyer

Goldman falls on news that CEO hired top lawyer

August 23rd, 2011 in News

NEW YORK (AP) - Goldman Sachs shares fell sharply Monday following news that its CEO, Lloyd Blankfein, has hired a top Washington defense lawyer.

Blankfein and other top executives at Goldman Sachs Group Inc. are facing inquiries from the Justice Department and other agencies on the firm's practices leading up to the financial crisis.

Goldman confirmed a report from Reuters that Blankfein has retained Reid Weingarten from the law firm Steptoe & Johnson LLP. Weingarten is known to have represented top corporate executives who have been charged with wrongdoing including former WorldCom chief Bernard Ebbers.

Weingarten's office didn't immediately respond to requests for comment. Goldman Sachs said in a statement: "Blankfein and other individuals who were expected to be interviewed in connection with the Justice Department's inquiry into certain matters raised in the (Senate's Permanent Subcommittee on Investigations) report hired counsel at the outset."

Goldman paid $550 million in July 2010 to settle a lawsuit filed by the Securities and Exchange Commission that accused the firm of creating and selling mortgage securities investment that were designed to fail.

In April, the Senate's Permanent Subcommittee on Investigations released a report that said Goldman "misled" its clients and Congress. The report said bank profited from betting billions of dollars against the subprime mortgage market and then misled Congress during testimony in 2010. The Justice Department launched an inquiry shortly thereafter.

Goldman's shares fell 4.7 percent to $106.51. Most of the losses happened in the last 15 minutes when the news was first reported by Reuters.