Investment Company Barred From Business With State

From Reuters

Goldman, Sachs & Co. has been temporarily barred from acting as a financial advisor in any California treasury or authority transaction because of a legal dispute with the state, the state Treasurer’s office disclosed Sunday.

In a letter dated Nov. 30 to Goldman Sachs Vice President Ed Burdett, deputy California state Treasurer L. Steven Spears said Goldman Sachs will not be permitted to act as financial advisor until the litigation is resolved.

“Until this action is resolved, the Treasurer’s office will not permit Goldman, Sachs & Co. to be involved as financial advisor in any Treasury or Authority transaction,” Spears said.


“Moreover, Goldman, Sachs & Co. may not serve as senior manager, co-manager, member of a selling group or financial advisor for any transaction” financed through the California Statewide Communities Development Authority, Spears said.

As reported earlier this month, Goldman Sachs and the state have been negotiating to settle a massive lawsuit that alleges that the firm failed to fully disclose its role in an ill-fated hospital deal financed with tax-exempt debt through the California authority.

In its lawsuit, amended Nov. 27, 1995, the state alleges that Goldman Sachs failed to disclose its roles in the sale of West Valley Hospital Medical Center and Sherman Oaks Community Hospital and Health Center in the San Fernando Valley.

The state’s suit alleges other violations of law by Goldman Sachs and seeks about $586 million from the firm.

A Goldman Sachs spokesman said earlier this month that it “acted completely appropriately and provided high quality banking services to our clients. We complied with the ethical regulations of the state agency as existed at the time. As we’ve said in the past, this lawsuit is without merit.”

Goldman representatives could not be reached for comment.