Goldman Sachs Stock Fraud

Two senior stock analysts at Goldman Sachs Group Inc. exchanged e-mails in late 2000 that indicate both were troubled by the firm's bullish stance on telecommunications stocks, but in some cases didn't lower their ratings on the stocks, in part because of concerns about possibly jeopardizing investment-banking business.

These emails from Goldman Sachs analysts are similar to those written by analysts at Merrill Lynch & Co., Citigroup Inc.'s Salomon Smith Barney unit and the Credit Suisse First Boston unit of Credit Suisse Group AG.

Elliot Spitzer and other investigators are sifting through email messages and other documents from Goldman Sachs as part of a broad inquiry into conflicts of interest between Goldman Sachs research department and investment banking division.

The news of these emails was reported in the London Times. James Golob, who is the London-based co-head of telecommunications research, noted in an e-mail to New York-based co-head Frank Governali Aug. 24, 2000, that telecom stocks still made up the bulk of companies on Goldman's recommended list, even though many of the stocks had been "tanking for three months."

In an e-mail response later that day, Mr. Governali agreed the situation was "ridiculous" and noted that, in some cases, "investment banking considerations have prevented me from making a change." Mr. Governali cited AT&T and WorldCom Inc. as examples of where this had occurred.

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