“Fair and Care” vs. Goldman Sachs

Print Friendly

Weili Dai (left) and Sehat Sutardja (Photo by Joe Manio)

Next month will mark the 33rd anniversary of Weili Dai’s arrival from China in San Francisco, where she attended Abraham Lincoln High while working after school at her parent’s “Xi Hu” or West Lake Hotel near Moscone Convention Center. “I have two very simple words – fair and care,” she said in a 2010 interview. The words represented her ideal “win-win” relationships for family, friends, employees and the way “we conduct business with our partners or customers. It’s focusing how together we make business more successful,” she said…

RISKY BUSINESS: However, “fair and care” was shunted aside after Goldman Sachs (NYSE: GS) – the New York-based global banking, securities and investment giant. Originally, the leviathan managing $923 billion in assets (2011) gained her trust and her husband Sehat Sutardja for underwriting the entrepreneurs’ Marvell Technology Group’s (NASDAQ: MRVL) IPO in 2000 for $1.36 billion and then managing their fortune. While Marvell’s founders wanted to pursue a conservative investment strategy, Goldman between 2005 and 2008 went on to place their assets in “unsuitable investments” such as hedge funds and stocks requiring margin calls. Today, Sehat – whose 271 patents garnered a nomination from President Obama’s for the 2011 White House National Medal of Technology – and Weili are awaiting arbitration seeking several hundreds of millions dollars in damages and punitive damages from Goldman Sachs (NYSE: GS) following their complaints with the SF office of the Financial Industry Regulatory Authority this January and in San Francisco Superior Court last April 2011…

5th largest maker of chips in the world

ENDS WITH ‘L’ LIKE INTEL: The Santa Clara-based Marvell, the 5th largest maker of semiconductors with $3.6 billion in sales (2011) and 5,700 employees generate worldwide chips ubiquitously found in products from phones, games to greentech … After a short discussion at the dinner table with Sehat, Weili recalled, “we wanted to build a wonderful company, to start a successful company, a marvelous company…. My husband said ‘let’s add an ‘L’’ and we will build a big company like Intel and Novell” according to her 2010 interviews with Chinese-language China Business News and English-language Shanghai Daily

Attorney Joe Cotchett (Photo courtesy of Cotchett, Pitre and McCarthy)

GOLDMAN FRAUD “Our clients’ claims go directly to the culture of corruption at Goldman Sachs,” said attorney Joe Cotchett, representing Marvell’s co-founders. Among the charges that he and John Keker as well as Susan Harriman, Philip Gregory and Nanci Nishimura have alleged is that Goldman “manipulated the 2008 financial crisis to defraud the [couple] of several hundreds of millions of dollars.” The FINRA filing asserts that in the wake of the 2008 financial crisis, Goldman Sachs (NYSE: GS) was under great stress – incurring its first quarterly loss in its history ($2.1 billion, 4th quarter 2008) and losing two-thirds of its stock value in less than four months. In late November 2008, Goldman executives and their team “demanded that Dai and Sutardja sell Marvell shares by issuing a ‘margin call’” for stocks which the couple bought while pledging their Marvell stock as collateral. Under “intense pressure,” the Marvell (NASDAQ: MRVL) husband and wife team had no choice but to sell their Marvell shares in late 2008, valued between $6 and $7 per share, compared to the $15.62 value as of the January13, 2012 filing of the complaint….

Goldman Sachs, the $923 billion leviathan

UNDER ASSAULT: Goldman has offered no official comment so far to these claims. However, the Keker and Cotchett attorneys have jumped on the bandwagon citing a pattern of Goldman Sachs (NYSE: GS) corruption, indictments and investigations, including a former UK employee excoriating Goldman in a March 14 open letter to the New York Times. Former executive Greg Smith cited Goldman’s managing directors had referred to clients as “muppets” and called on leadership to reverse the corporate culture placing money before clients and threatening client trust. CEO Lloyd Blankfein and President Gary Cohn replied that Smith did not “reflect our values, our culture and how the vast majority of people at Goldman Sachs think about the firm and work it does on behalf of our clients.” Few “disgruntled” people did not reflect all 30,000 as Blankfein and Cohn cited an employee survey where nine in ten thought Goldman provided clients “exceptional service.” And recently, Goldman was rated among the top 25 as “one of the best places to work in the United Kingdom”….

Attorney John Keker (Photo courtesy of Keker and Van Nest)

CONFLICT OF INTEREST: But no Goldman Sachs (NYSE: GS) representative ever disclosed to Dai and Sutardja that, for example, Goldman was increasing its stake in Silicon Valley’s NVIDIA (NASDAQ: NVDA) (a stock Goldman recommended Dai to buy) while forcing her to sell. Goldman insisted she and Sutardja sell Marvell shares while coincidentally Goldman was “holding on to the vast majority of its own Marvell stock.” As Sehat and Weili sold 8.65 million shares on December 10, 2008, Goldman-related and controlled funds bought over 49 million shares of Marvell stock (NASDAQ: MRVL). Dai and Sutardja’s attorneys claimed they would “have not sold the Marvell stock but for Goldman’s misrepresentations and concealments that were calculated to advance Goldman’s economic interests at [their] expense…”

“SEC RULE”: Triggering Sehat and Weili’s sales of Marvell stocks was Goldman Sachs (NYSE: GS) and San Francisco-based Managing Director Bradley DeFoor, telling the couple that “SEC rules prohibited a stock valued at less than $5.00 per share from being used as collateral for a margin loan.” Before selling, Sutardja’s email asked for DeFoor on December 3, 2008 to send account documents and “the specific SEC $5 call rules that you mentioned to me a few days ago…” DeFoor responded with the documents, but not the SEC call rules. DeFoor then “verbally pressured” and accused Sutardja and Dai of “stonewalling” the sale with inquiries about the rule. According to the complaint, “DeFoor was verbally abusive on telephone calls with [Sutardja and Dai], who were simply trying to understand what was going on. He intimidated [them] by stating they were failing to comply with an SEC rule”…Last September, Security and Exchange Commission Chair Mary Schapiro responding to an inquiry by Rep. Anna Eshoo wrote, “There is currently no rule that requires the sale of shares in a margin account if the market value of the shares falls below $5.00”…According to the FINRA filing, the misrepresented rule was Goldman’s own internal policy and “not a regulatory requirement”….Goldman’s Vice Chairman John Weinberg and Tucker York, Managing Director of Goldman’s Private Wealth Management for North America, on November 23, 2010 talked on the phone with Dai and Sutardja. York is alleged to have said, “If the rule was not an SEC rule, then it was a New York Stock Exchange (NYSE) rule.” However, no NYSE rule exists. “Goldman contrived a margin call based on a mythical ‘SEC Five Dollar Rule,’” concluded Philip Gregory of Cotchett…

LEGAL DREAM TEAM: Dai and Sutardja’s “Legal Dream Team” includes former SF Police Commissioner Keker of Keker and Van Nest whose clients included Taiwan Semiconductor Manufacturing Company (NYSE: TSE), Major League Baseball players union and the US Department of Justice (against rogue Colonel Oliver North)…Cotchett’s firm – Cotchett, Pitre and McCarthy – won the largest jury verdict of $3.3 billion for 23,000 plaintiffs victimized in 1990 by Charles Keating’s Lincoln Savings & Loan. Cotchett’s won a pro bono settlement for 8,600 hapa kids from the US for its former Subic Bay Naval Base in the Philippines…

GIVING BACK: Some tidbits about Weili and Sehat… The two’s most recent generous contributions include the Center for Information Technology Research in the Interest of Society (CITRIS) named after Sehat at UC Berkeley. The new building – equivalent to an MIT facility in the U.S. – fuses education and technology to create solutions for the world’s most pressing social, environmental and health care concerns…HIS & HER NAMES: “Dai Weili [was] given to me by my grandfather,” she said. “Every time a grandkid was born, he would send a name to my parents.” With her elder brothers already named “great people” and “great progress,” her name became “great stand” –reflecting her grandparents love for China and “making people successful”… Schoolboys thought she was a boy. The confusion all started with the name “Great Stand” which is usually reserved for males. “Before I was born, [my parents] had already fixed the name. It didn’t matter whether it was a boy or girl,” she said. Her name had a more interesting twist on her wedding invitation. “My name sounds like a boy’s name,” she said. “[But] my husband’s name in Chinese is a girl’s name”… WEILI VERSUS YAO: Weili’s first passion is playing basketball. From age 9 to 14, she played semiprofessional ball in Shanghai. Also an athlete in badminton and track and field, she even now would shoot a few hoops with her employees at Marvell’s Santa Clara campus in Silicon Valley. “When I use to play basketball, I was the forward position… Even though [center Yao Ming] is taller, we can run faster,” she said. Joking aside, she emphasized the strategy to coordinate the team, “To win the game, it’s not about you, me, him or her. It’s we, us.”

MISS ME?: Email Samson Wong at potsticker@prodigy.net.

About the Author

Veteran columnist has appeared in up to 450,000 households weekly in the SF Independent, Examiner (2000-04) and AsianWeek since 1996. As Editor-in-Chief (2003-07), AsianWeek and Samson received wide recognition from the California Legislature, New American Media, League of Women Voters, GLAAD, Organization of Chinese Americans, SPUR and APA civic groups. Thru the SF Citizens Advisory Committee on Elections, SF Elections Task Force and Chinese American Voters Education Committee, Wong helped boost APA influence from 25,000 in the 1980s to over 50,000 voters by the early 1990s.