Goldman Sachs Group Inc. hired law firm Boies, Schiller & Flexner LLP to defend the company against a $1 billion lawsuit filed by Australian hedge fund Basis Capital this week, said a person briefed on the matter.
The law firm, founded by David Boies and Jonathan Schiller in 1997, has handled Wall Street litigation including the Lehman Brothers Holdings Inc. bankruptcy case. The person declined to be identified because the hiring hasn’t been made public.
Michael DuVally, a spokesman for New York-based Goldman Sachs, and Dawn Schneider at Boies, Schiller said they couldn’t comment. Reuters reported the firm was hired earlier today.
The June 9 lawsuit by Basis Capital’s Basis Yield Alpha Fund focuses on Goldman Sachs’s sale of the “now notorious Timberwolf collateralized debt obligation,” Basis said in a statement. The suit filed in Manhattan federal court says the fund was forced into insolvency after buying mortgage-linked securities created by Goldman Sachs, in what one of its own executives described internally as a “shi**y deal.”
Boies, Schiller joins a growing list of firms providing legal and regulatory advice to Goldman Sachs, the most profitable firm in Wall Street history, which was sued by the Securities and Exchange Commission in April over its marketing of another CDO known as Abacus.
Richard H. Klapper at Sullivan & Cromwell LLP is among the partners leading Goldman Sachs’s defense against the SEC lawsuit. The firm also received advice ahead of a U.S. Senate subcommittee hearing in April from K. Lee Blalack II of O’Melveny & Myers LLP, who has 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.
Last month, Goldman Sachs considered hiring law firm Paul, Weiss, Rifkind, Wharton & Garrison LLP to bolster its legal team, before deciding against it, a person familiar with the matter said at the time.
In a June 9 statement about the Timberwolf lawsuit, Goldman Sachs called it “a misguided attempt by Basis, a hedge fund that was one of the world’s most experienced CDO investors, to shift its investment losses to Goldman Sachs.”
The case is Basis Yield v. Goldman Sachs, 1:10-cv-04537, U.S. District Court, Southern District of New York (Manhattan).