Goldman Accused of Pressuring California Municipalities to Drop Muni-Bond Suit

An interesting development and one that smacks of desperation of true. The case itself was allowed to go forward last month, with several of the companies involved including General Electrics Trinity group and AIG not being named in the suit.

A group of 11 California issuers are charging that an affiliate of Goldman Sachs & Co., J Aron & Co., is pressuring a member of the group to remove Goldman as a defendant in its civil suit charging that 36 Wall Street and other firms participated in a vast bid-rigging conspiracy for municipal swaps and investment agreements.

In a filing with the U.S. District Court for the Southern District of New York, the group of California entities last week charged that J. Aron has halted its commodity trading business with the Sacramento Municipal Utility District at the direction of “senior legal people” at Goldman, until the litigation “gets sorted out.”

Citing a January conversation between Dennis Holcomb, a principal energy trading specialist at SMUD and a J. Aron official, the California entities said: “It is clear from the statements of the representative of the Goldman affiliate, J. Aron, that the order not to do business with SMUD was intended to place pressure on SMUD to abandon its claim in the instant action against ­Goldman.”

The claim came in a motion filed jointly by the group of issuers that have individually sued Goldman and other firms.Goldman fired back Friday, saying in a separate filing that it would not abide by the issuers’ “grossly unfair and irresponsible mischaracterization.”

Now the criminal trial against CDR Financial products is still ongoing with guilty pleas already being submitted. Additionally there has already been a push by the Department of Justice to delay the trial so as not to interfere with the criminal proceedings. As for GE, they may not have been named yet, but they are hardly in the clear.