IKB considers suing Goldman Sachs for fraud

AFP - [email protected] • 21 Apr, 2010 Updated Wed 21 Apr 2010 18:21 CEST
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German lender IKB said Wednesday it is considering suing US giant Goldman Sachs after losing €150 million in a fund that is the subject of fraud charges in the US.

"We are currently examining the legal framework, which is relatively uncertain because the situation is complicated," an IKB spokesman told AFP.

Germany's state development bank KfW, which bailed out IKB with billions of euros when it became the first major casualty of the global financial crisis, was also looking into legal action, a KfW spokesman said.

In a move that shocked Wall Street, the US Securities and Exchange Commission (SEC) charged Goldman Sachs with fraud on Friday, sending the company's share price into a tailspin.

The SEC accused Goldman Sachs of "defrauding investors by misstating and omitting key facts" about a product based on sub-prime, or higher-risk mortgage-backed securities.

The company has vigorously denied any wrongdoing and sought to defend its reputation as Wall Street's most stable finance house.

Meanwhile, Germany's financial regulator Bafin has requested further information from the SEC on its investigation.

Britain's Financial Services Authority (FSA) watchdog on Tuesday launched a probe into the US investment bank after Prime Minister Gordon Brown accused it of "moral bankruptcy."

According to business daily Handelsblatt, some members of Chancellor Angela Merkel's ruling coalition are considering a freeze on Germany's financial ties with Goldman Sachs.



AFP 2010/04/21 18:21

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