Goldman Questioned on Bear, Lehman Shares Fall: WSJ
Goldman Sachs has been questioned by chiefs of rivals Bear Stearns and Lehman Brothers about speculation that the securities firm had a role in putting pressure on their firms' stocks, the Wall Street Journal said on Wednesday citing people familiar with their talk.
Alan Schwartz, who headed Bear Stearns when it collapsed in March, has asked Goldman CEO Lloyd Blankfein whether there was any truth to talk that in the days preceding Bear Stearns's fall, traders in Goldman's London office manipulated the struggling firm's stock, the paper said.
Lehman Brothers CEO Richard Fuld Jr., whose firm's shares also have been battered, has also spoken with Blankfein.
The Lehman chief also contacted traders he felt may have been bad-mouthing his stock, the paper said.
Spreading rumors one knows to be false with the intention of manipulating a public company's price is illegal.
The U.S. Securities and Exchange Commission has been investigating whether investors have looked to profit by spreading rumors to push down Lehman and Bear shares.
Goldman , which strongly denied wrongdoing, never altered its terms for doing business with Bear even as lenders pulled their financing and some trading partners retreated during the troubled securities firm's struggles in early March, the paper said citing a Goldman spokesman.
Earlier this year, JPMorgan Chase acquired Bear Stearns for a fire-sale price, after the latter collapsed under the weight of the credit crisis and suffered the equivalent of a bank run.
In the weeks before Bear reached its initial deal to sell itself, Goldman Sachs International, which encompasses the firm's European trading units, was one of the most-active parties in trading securities known as credit default swaps that it had bought from or sold to Bear, the paper said citing trading documents involved in a regulatory probe into the collapse.
The documents show that a handful of other prominent firms cut their exposures to Bear Stearns, including Chicago hedge fund Citadel Investment Group and New York hedge fund Paulson, which is run by a Bear Stearns alumnus.
Goldman, Lehman, Citadel and Paulson could not be immediately reached for comment.