* Investor lawsuit claims firm hid details
* Goldman not immediately available for comment
* Shares of Goldman fall
(Adds interview with lawyer, bylines)
By Alexandria Sage and Jonathan Stempel
SAN FRANCISCO/NEW YORK, April 26 Goldman Sachs
Group Inc (GS.N) and Chief Executive Lloyd Blankfein were hit
with a shareholder lawsuit claiming they hid key details about
a risky transaction that resulted in civil fraud charges and a
plummet in its stock price.
Monday's lawsuit filed in Manhattan federal court accused
Goldman of making materially false and misleading statements
about an Abacus collateralized debt obligation tied to subprime
mortgages that regulators say it created and marketed though it
was designed to lose money.
The complaint also alleged Goldman concealed its receipt of
a Wells notice last July from the U.S. Securities and Exchange
Commission, indicating potential civil charges over Abacus.
According to the complaint, Goldman's actions caused its
shares to trade at inflated levels. The shares fell 12.8
percent on April 16, wiping out more than $12 billion of value,
after the SEC filed a civil fraud lawsuit against Goldman.
"For anyone to say this type of development is not
something a reasonable investor would not want to know simply
does not hold water," said Darren Robbins, a partner at Robbins
Geller Rudman & Dowd LLP, which filed the complaint.
The lawsuit seeks class-action status and unspecified
damages on behalf of potentially thousands of shareholders.
Goldman did not immediately return a call seeking comment.
Other executives named as defendants are Chief Operating
Officer Gary Cohn and Chief Financial Officer David Viniar.
Graphic on Goldman Sachs Case
BreakingViews on Senate probe into Goldman [nLDE63P0JX]
Shares of Goldman were down $4.95, or 3.2 percent, at
$152.44 in afternoon trading on the New York Stock Exchange.
BLANKFEIN TO TESTIFY
In its lawsuit -- which involved the same Abacus
transaction -- the SEC accused Goldman of failing to tell
investors that securities underlying Abacus were chosen by
billionaire hedge fund investor John Paulson, who was betting
that the securities would lose value.
Paulson made about $1 billion on Abacus, roughly the amount
other investors are believed to have lost. Goldman called the
SEC allegations unfounded and Paulson has not been charged.
Blankfein and Fabrice Tourre, a Goldman vice president
believed to be the main creator of the Abacus transaction, are
scheduled to testify before a Senate panel on Tuesday.
Democrats are using the case to try to gain momentum to
tighten financial oversight, which President Barack Obama
Robbins said Monday's lawsuit is the first securities fraud
case filed against Goldman and seeking class-action status
since the SEC sued. Legal experts expect others to follow.
The named plaintiff is Ilene Richman, a Goldman shareholder
who Robbins said was "extremely troubled by the conduct that
went on." She was not immediately reachable for comment.
Last week, Goldman was also hit with two shareholder
derivative lawsuits accusing the bank's executives and board of
breaching fiduciary duties. Shareholders bring derivative
lawsuits on behalf of companies to enforce or defend rights
that the companies fail to address on their own.
The case is Richman v. Goldman Sachs Group Inc et al, U.S.
District Court, Southern District of New York.
(Reporting by Alexandria Sage and Jonathan Stempel, editing by
Gerald E. McCormick)