Goldman Sachs Drops Suit Against Former Executives (Update3)

By Cary O’Reilly

Feb. 19 (Bloomberg) -- Goldman Sachs Group Inc. dropped a lawsuit and an arbitration proceeding against seven former executives at its private-wealth management division who left this month to join a unit of rival Credit Suisse Group AG.

Goldman Sachs filed a voluntary motion of dismissal today, just two days after suing its former workers in federal court in Atlanta, court records show. An arbitration case has also been “resolved,” company spokeswoman Melissa Daly said, declining to provide details.

Credit Suisse Securities USA offered the group of investment managers “tens of millions of dollars” to leave Goldman Sachs in an act of “pirating,” according to the complaint filed Feb. 17. Several of the managers immediately began soliciting former clients in violation of their Goldman Sachs contracts, the investment bank said.

Goldman Sachs had sought a court order against former employees David Greene, Craig Savage, Andrew Thompson, Sharran Srivatsaa, John Pitt, Stephanie Dennard and Kim Tyson to prevent them from disclosing proprietary information, and to block them from recruiting ex-clients. No reason was given in today’s filing for dropping the case.

Zurich-based Credit Suisse, which has offices in the same Atlanta building where the former executives worked, wasn’t named as a party in the suit.

Wealth Management

The seven former executives were members of Goldman Sachs’s private-wealth management team that advised 140 clients. They resigned from the firm on Feb. 5. Some Goldman Sachs clients began getting solicitations from the defendants the next day, according to the complaint.

Goldman Sachs rose 19 cents to $155.92 as of 3:20 p.m. in New York Stock Exchange composite trading. The shares have declined 7.6 percent this year. Credit Suisse fell 31 centimes to 47.29 Swiss francs in Zurich.

The case is Goldman Sachs & Co. v. Greene, 10-cv-0453, U.S. District Court, Northern District of Georgia (Atlanta).

To contact the reporters on this story: Cary O’Reilly in Washington at caryoreilly@bloomberg.net.

Last Updated: February 19, 2010 15:39 EST