Corporate Finance Weekly reports that a former senior executive of a company taken public by Goldman Sachs is claiming he lost a fortune as the firm mishandled his finances due to a conflict of interest.
Herman Bluestein, a former development officer at NorthPoint Communications, has lodged a complaint with the National Association of Securities Dealers, claiming that his investment portfolio managed by Goldman fell in value from $35m to around $100,000 in just 18 months.
Bluestein claims that Goldman was negligent as the firm kept his portfolio concentrated in too few stocks. He further alleges that the Goldman private bank, which was managing his portfolio, was encouraged by the firm's investment bankers not to sell his NorthPoint shares as they were worried how the market would react if an insider was seen to sell down or out. The company, which was IPO'd by Goldman in 1999, is now bankrupt.
The former NorthPoint man is also believed to have written to the US Securities & Exchange Commission seeking an investigation into what he feels are cross-marketing abuses between investment banking and the private clients businesses.
Goldman will fight the allegations and claims that Bluestein ignored its suggestions to diversify his portfolio.