Marvell Technology Group Ltd. (MRVL) founders Sehat Sutardja and Weili Dai have sued Goldman Sachs Group Inc. (GS) for allegedly defrauding the pair of more than $100 million in stock they had under management with the investment bank.
The lawsuit filed Monday in San Francisco Superior Court alleged Goldman's wealth management unit and two of its account executives forced Sutardja and Dai to pledge their Marvell stock to meet a margin call, shares that Goldman then sold.
Goldman Sachs declined to comment on the lawsuit. Calls to the West Coast law firms representing Sutardja and Dai weren't immediately returned.
According to the complaint, a Goldman executive said the margin call was mandated by the Securities and Exchange Commission's "Five Dollar Rule" because their semiconductor company's shares had dropped below $5. The SEC has no such rule.
Goldman used the margin call to satisfy its own liquidity needs during the worst of the financial crisis, the suit alleges, and put its own interests ahead of its clients'.
-By Drew FitzGerald, Dow Jones Newswires; 212-416-2909; Andrew.FitzGerald@dowjones.com