Goldman Sachs Group Inc. was sued by two co-founders of Marvell Technology Group Ltd. who allege the investment bank tricked them into selling company shares by claiming the sale was needed to cover a margin loan.
Sehat Sutardja, Marvell’s chief executive officer, and Weili Dai, the company’s former chief operating officer, said they were duped into selling shares in 2008 that are now worth $141.5 million, according to a complaint filed yesterday in state court in San Francisco. Goldman Sachs pressured them by claiming a regulatory rule, which didn’t exist, required them to sell their stock, according to the complaint. Goldman Sachs held millions of shares of Marvell stock in 2008, they said.
“Goldman forced its clients to unnecessarily liquidate their holdings through forced margin calls, only to repurchase these same shareholdings for accounts owned by Goldman and its related hedge funds,” according to the complaint.
Goldman Sachs also forced a sale of Sutardja and Dai’s shares of Nvidia Corp., causing them to lose $166 million, they said in the complaint.
The lawsuit, filed under California’s unfair competition and the state’s Consumers Legal Remedies Act, seeks compensatory damages for the two stock sales and unspecified punitive damages.
Marvell, the maker of processors for the BlackBerry phone, is based in Santa Clara, California.
Andrea Rachman, a spokeswoman for New York-based Goldman Sachs, didn’t return a voice-mail message after regular business hours yesterday.
The case is Dai v. Goldman Sachs, CGC-11-510102, Superior Court of California (San Francisco).