(December 17, 2009) – A union pension plan has sued financial giant Goldman Sachs over its 2009 bonus pool.
The lawsuit, brought by law firm Grant & Eisenhofer at the behest of the Michigan-based Security Police and Fire Professionals of America Retirement Fund (a $5.8 billion fund), alleges that the record bonus payments set to be distributed to Goldman Sachs—estimated at $22 billion—are the result not of executive performance, but of fund received in the government’s support of the financial industry. By paying such bonuses, the suit claims, the firm is breaching its fiduciary duty to its shareholders. According to a press release, Goldman Sachs’s bonuses were the result of “a trillion-dollar investment made by the American taxpayers that was meant to stabilize the financial industry, [and]…not based on the hard work of the executives.” The lawsuit has been brought in the New York State Supreme Court.
Not surprisingly, Goldman Sachs has rejected the premise of the lawsuit: “We think the suit it entirely without merit,” said firm spokesperson Lucas van Pragg, according to Bloomberg News.
Goldman Sachs received $10 billion from the federal government in the fall of 2008 through the Troubled Asset Relief Program (known as TARP); it also, through a Federal Deposit Insurance Corporation program that guaranteed debt, was able to accumulate $29 billion in cash. However, the firm returned the $10 billion in June of this year.
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