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David Solomon, president and chief operating officer of Goldman Sachs & Co., listens during a Bloomberg Television interview at the Milken Institute Global Conference in Beverly Hills, California, April 30, 2018.
Goldman Sachs is being accused of bilking a corporate client who hired the investment bank to advise it on a $2.9 billion takeover last year.
The bank put its own financial interests ahead of client United Natural Foods, resulting in about $200 million in unearned fees or interest paid in the deal, the food-delivery company said in a suit filed Wednesday. Goldman had advised United Natural – a top distributer to Whole Foods – on its July 2018 deal to purchase wholesaler Supervalu.
“We expected our extremely well-paid transaction advisors to provide ethical counsel and unbiased support around this landmark acquisition, not leverage their positions to pursue larger profits for themselves and other clients at our expense,” Steve Spinner, CEO and chairman of United Food, said in a statement.
The lawsuit comes at a delicate time for Goldman. The bank is under international scrutiny for helping Malaysia raise money for a $6.5 billion investment fund known as 1MDB. Instead of helping the nation, at least $4.5 billion was plundered from the fund by a disgraced Malaysian financier with the help of ex-Goldman partner Tim Leissner. An area of focus is the $600 million in fees the bank earned on three deals tied to 1MDB, an amount that outsiders have called excessive.
The New York-based investment bank intends to “vigorously defend” itself against United Food’s accusations, which it said are “entirely without merit,” according to a spokeswoman. Bank of America is also a defendant in the suit; a spokesman for the lender declined to comment.
United Foods is seeking to recoup the roughly $200 million in fees and interest it says were unearned as well as several hundred million dollars more related to Supervalu credit default swaps, according to a person with knowledge of the case.