May 17 (Bloomberg) -- Goldman Sachs Group Inc., facing a fraud lawsuit from the U.S. Securities and Exchange Commission, ended talks to hire Paul, Weiss, Rifkind, Wharton & Garrison LLP to bolster its legal team.
The discussions, which started earlier this month, were terminated last week and Goldman Sachs doesn’t plan to hire another law firm instead, a person briefed on the matter said, speaking anonymously because the talks were private.
Lucas van Praag, a spokesman for Goldman Sachs, confirmed that the firm isn’t hiring Paul, Weiss. Madelaine Miller, a spokeswoman for Paul Weiss, didn’t return a call seeking comment.
Goldman Sachs, which generated a record $13.4 billion profit last year, was seeking additional legal advice as it faces issues tied to its sale of mortgage-linked securities that include the SEC suit and a U.S. Senate subcommittee hearing last month. Federal prosecutors are also investigating the firm’s activities in the area, people familiar with the matter said last month.
The plan was to supplement, not replace, the company’s current legal advisers including Sullivan & Cromwell LLP.
Richard H. Klapper at Sullivan & Cromwell is among the partners leading Goldman Sachs’s defense against the SEC lawsuit. The firm also received advice ahead of the Senate hearing from K. Lee Blalack II of O’Melveny & Myers LLP, who has previously worked as the subcommittee’s chief counsel and staff director. Gregory Craig, President Barack Obama’s former White House counsel, is now the partner at Skadden, Arps, Slate, Meagher & Flom LLP assigned to advise Goldman Sachs.
Shares of Goldman Sachs fell 59 cents, or 0.4 percent, to $142.64 in New York Stock Exchange composite trading. The stock has dropped 15.5 percent this year, the most of the biggest six banks in the U.S.
The case is Securities and Exchange Commission v. Goldman Sachs, 10-cv-03229, U.S. District Court, Southern District of New York (Manhattan).
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