Saturday, 23 August 2014
Last updated 1 day ago
Jul 26 2010 | 12:56pm ET
Goldman Sachs has appealed a $20.5 million arbitration award against it won by the creditors of collapsed hedge fund Bayou Group.
Goldman Sachs Execution and Clearing cleared the Connecticut hedge fund’s trades before its Ponzi scheme fell apart five years ago, costing investors more than $400 million. According to some 200 unsecured creditors, Goldman showed “either gross negligence or a willful choice to ignore signs of fraud” at Bayou.
A Financial Industry Regulation Authority arbitration panel sided with the creditors last month, the $20.5 million the largest arbitration award ever ordered against a securities firm. But Goldman counters that the money in question, allegedly fraudulently transferred between Bayou accounts, was never in its possession, and accused the arbitration panel of having “manifestly disregarded the law and exceeded its authority” in adopting a “novel bankruptcy law theory.”
“The debtors now stand to be paid twice—once through withdrawals before the bankruptcy was filed and once after through the award—for the same alleged transfers,” Goldman claimed in its lawsuit, filed Friday in Manhattan bankruptcy court.
Ross Intelisano, a lawyer for the creditors committee, called Goldman’s lawsuit “completely without merit.”
Aug 4 2014 | 7:42am ET
By now, U.S. and international subscribers have received their home or office delivery of the special 500th issue of Futures magazine. You can too!—a very special offer follows. The issue is the largest in years—filled with the best trading strategies and stories from 43 years of being the primary publication for commodity, stock, options and forex traders. Read more…
The July/August 2014 issue is our largest in years—filled with the best trading strategies and stories from 43 years of being the primary publication for commodity, stock, options and forex traders.
The Alpha Pages Editor's Note