We’ve written before about investment bankers who find themselves in hot water for playing both sides of a deal, or for concealing conflicts of interest. But sometimes bankers just do a lousy job of shielding clients from disaster. And the clients just have to live with it.
At least that’s one lesson from the tale of Goldman Sachs & Co. and the translation software company Dragon Systems Inc., which sold itself to Lernout & Hauspie Speech Products NV in 2000 in an ill-fated $580 million stock transaction. On Wednesday the U.S. Court of Appeals for the First Circuit acknowledged that Goldman’s deal advice to Dragon’s founders may have been “sloppy and unforthcoming.” But the court still sided with the bank’s lawyers at Ropes & Gray and Wachtell, Lipton, Rosen & Katz, affirming a judge and jury’s findings that Goldman isn’t liable for negligence or breach of fiduciary duty, and that the bank’s missteps don’t amount to unfair or deceptive conduct under Massachusetts state law.
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