The two founders of Marvell Technology Group Ltd. (MRVL) are suing Goldman Sachs Group Inc. (GS), alleging that Goldman unfairly coaxed the company into selling off shares by saying that the sale was necessary to meet a margin loan.
Santa Clara, Calif.-based Marvell also has offices in Austin, and is known for manufacturing processors for Research In Motion Ltd.’s BlackBerry phone.
The lawsuit was filed using California’s Consumer Legal Remedies Act and unfair competition claim and seeks compensation for two stock sales along with punitive damages.
According to the complaint filed in a state court in San Francisco, the Marvell executives said they were tricked into selling shares in 2008 that are valued at around $141.5 million today, and that Goldman cited a regulatory rule that didn’t exist to pressure Marvell’s founders into selling stock, opening millions of Marvell shares to Goldman.
“Goldman forced its clients to unnecessarily liquidate their holdings through forced margin calls, only to repurchase these same shareholdings for accounts owned by Goldman and its related hedge funds,” according to the lawsuit filed by Marvell CEO Schat Sutardja and Weili Dai, former COO of Marvell.
The pair also allege that Goldman manipulated sales of Sutardja and Dai’s shares in Nvida Corp. (NVDA), leading to a loss of $166 million.
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