CEO Watch Goldman Questioned About Bear's Collapse
The chief executive Lehman Brothers, Richard Fuld, and former Bear Stearns chief Alan Schwartz have questioned Goldman Sachs Group's Chief Executive Officer Lloyd Blankfein about speculation that the securities firm played a prominent role in pressuring their firms' stocks, according to a report by the Wall Street Journal.
Schwartz, who headed Bear Stearns before its epic collapse in March, asked Blankfein whether Goldman Sachs traders in London manipulated the firm's stocks. Fuld, who has had difficulty steering Lehman Brothers away from the credit crisis, also questioned Blankfein, according to the report.
"You're not going to like this conversation," Fuld told Blankfein when he first contacted him about the matter, according to the Journal.
Goldman Sachs has denied any wrongdoing. "We went out of our way to be supportive of Bear and were rigorous about conducting business as usual," Lucas van Praag, a Goldman spokesman, told the Journal.
Blankfein allegedly told Schwartz that any evidence of inappropriate behavior by traders would result in severe reprimands. Blankfein did not alter Goldman's terms for doing business with Bear Sterns, even as other big name lenders pulled their financing.
Spreading false rumors with the purpose of intentionally manipulating a public company's price is against the law.
The U.S. Securities and Exchange Commission is investigating trading documents to determine whether Bear Stearns stock, in the weeks before its collapse, suffered from insider trading and market manipulation.
Bear Stearns collapsed in March, a high profile victim of the credit crisis that has put a stranglehold Wall Street's biggest firms, as it saw the Federal Reserve help orchestrate its fire sale to J.P. Morgan Chase & Co.
