Quantcast
Connect with us

Lawsuit: Goldman Sachs bonuses bigger than its earnings

Published

on

A lawsuit filed against investment bank Goldman Sachs by a shareholder alleges that the company spent more money on corporate bonuses than it earned in 2008.

Shareholder Ken Brown’s lawsuit is one of two suits filed against the company this week over its controversial decision to hand out billions of dollars in bonuses even after it was accused of playing a central role in the financial collapse of 2008 and receiving $10 billion in direct aid from the US government.

ADVERTISEMENT

In his lawsuit (PDF), Brown states that Goldman Sachs gave out $4.82 billion in bonuses in 2008, despite earnings of only $2.32 billion that year. The lawsuit alleges that the company spent 259 percent of its income in the first quarter of 2009 on compensation.

Goldman Sachs handed out $16.7 billion in compensation in the first nine months of 2009, according to Bloomberg news service, and that figure may reach $22 billion for the entire year. Brown’s suit says the company typically sets aside 44 percent of its net revenue for employees.

“Payment of this exorbitant amount of compensation, which has little to do with Goldman Sachs’s performance, and was financed in large part with government bailout and taxpayer money, is a waste of the company’s assets and a breach of duty and loyalty,” Brown asserts in the suit.

Brown’s suit asks the court to order the company to return the bonus money to company coffers.

ADVERTISEMENT

In another lawsuit, filed Thursday, an Illinois pension fund that is a Goldman shareholder demanded that Goldman return some of the compensation it has handed out since the financial collapse. The Central Laborers’ Pension Fund wants compensation for damages to shareholders from the company’s compensation spending.

Reuters reports:

The lawsuit contends that Goldman’s revenue for the year was artificially inflated by government bailouts of the banking industry and the insurer American International Group Inc, as well as a change in Goldman’s fiscal year.

Such sums, and Goldman’s practice of continuing to pay out nearly 50 percent of net revenue as compensation, show “scant regard” for the interests of shareholders, it said.

Both lawsuits “are completely without merit,” Goldman Sachs spokesman Michael DuVally told Bloomberg news.

Goldman Sachs has paid back the $10 billion it received in direct aid from taxpayers, meaning the company is not bound by government compensation limits. But the $10 billion figure doesn’t include the billions more the company received thanks to pressure by the Fed on insurance giant AIG to pay all of its debts to Goldman — and other AIG creditors — in full.

ADVERTISEMENT

On Thursday, it was revealed that during the financial crisis, the New York Fed — then run by current Treasury Secretary Tim Geithner — tried to cover up its demand that AIG use taxpayers’ money to compensate Goldman Sachs.


Report typos and corrections to: [email protected].
READ COMMENTS - JOIN THE DISCUSSION
Continue Reading

Breaking Banner

‘The man who sold America’: Mitch McConnell’s mountain of political sins catalogued in devastating new profile

Published

on

Mitch McConnell finally has the power he's longed for since he was a 22-year-old intern for Sen. John Sherman, but his ruthless march to become Senate majority leader has seen him abandon almost all of his stated principles -- and earned him a lot of enemies.

The Kentucky Republican has been unpopular in his home state for years, but this summer has seen his approval rating plunge to 18 percent after MSNBC's Joe Scarborough tarred and feathered him with the nickname "Moscow Mitch," and he's increasingly seen as "the man who sold America," reported Rolling Stone.

Continue Reading

Breaking Banner

Sarah Sanders rages on Fox News that the ‘out-of-control’ media is ‘making stuff up’ about Trump

Published

on

In her new gig as a Fox News contributor, former White House spokesperson Sarah Huckabee Sanders complained to host Sean Hannity that the "out-of-control" media makes "stuff up" about Donald Trump because they hate him for winning in 2016.

Sanders, who once told reporters that "countless" FBI agents had lost confidence in James Comey only to later tell investigators from special counsel Robert Mueller's office that she made it up, complained to the Fox host about the press being untrustworthy.

Continue Reading
 

2020 Election

Inside the secret GOP plan to keep power in 2020 — and beyond

Published

on

In 2020, we need to pay attention to state elections as well as elections for president and Congress. State elections could decide whether the Republican Party further corrupts American democracy.

As demographics change — and America becomes more diverse and more liberal — the GOP has responded by implementing policies that will take away power from the American people. Rather than changing with the times, they’ve got another plan: minority rule – by them.

Continue Reading
 
 
Help Raw Story Uncover Injustice. Join Raw Story Investigates for $1. Go ad-free.
close-image