Goldman Accused Of Failing To Raise Red Flags

Old Goldman Sachs

Goldman Sachs bankers failed to raise red flags about Lernout & Hauspie's accounting irregularities more than a decade ago, costing speech recognition software pioneers at Dragon Systems nearly all of their life's work and about $600m, a lawyer told a jury on Monday in federal court.

'They were relying on Goldman to take care of them and whether or not they should be worried about these questions', plaintiffs' lawyer Alan Cotler said in his opening statement.

He kicked off what is expected to be a two-month courtroom battle in U.S. District Court in Boston.

The trial pits Janet and James Baker, a suburban Boston husband-and-wife team that launched Dragon from the living room of their home with $30,000, against Goldman Sachs, the iconic Wall Street firm whose reputation has been tarnished in more recent years on allegations it has treated some clients shabbily.

Reuters reports that in the case brought by the Bakers, Goldman denies civil claims that include gross negligence and breach of fiduciary duty.

In 2000, just months after Belgium-based Lernout & Hauspie acquired Dragon for $580m in an all-stock deal, the company collapsed in an accounting scandal that sent it reeling into bankruptcy.

Hit the link below to access the complete Bloomberg article:

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