Goldman sued by Marvell cofounders
13 Apr 2011
During the worst period of the financial crisis, two co-founders of Marvell Technology had to sell a big portion of stock in the semiconductor company following a margin call from Goldman Sachs.
On Monday, the duo, Weili Dai and Sehat Sutardja, filed a lawsuit in California Superior Court alleging that they had been duped by Goldman into selling the shares so it could buy them for its own account.
''Goldman forced its clients to unnecessarily liquidate their holdings through forced margin calls, only to repurchase these same shareholdings for accounts owned by Goldman and its related hedge funds, some currently under investigation by the federal government,'' according to the complaint.
According to analysts, margin calls are hard to win. They say customers have to typically sign detailed contracts before they can borrow on margin which allows institutions like Goldman to act swiftly to liquidate holdings to meet margin calls.
Customers usually have to fight their claims in arbitration, a closed-door process, but in this case lawyers for Dai and Sutardja are arguing that California law opens the door for them to bring their grievance to court.
Sutardja is the president, chief executive and chairman of Marvell while Ms Dai, another co-founder, is a vice president and general manager of communications and consumer business.
