Back to top

Analyst Blog

The Goldman Sachs Group, Inc. (GS - Analyst Report) continues to be braced with legal woes. Recently, it has been subject to the European Union (EU) anti-trust probe concerning the bank’s underwater power cables alliance with Prysmian S.p.A. Depending on the results of the investigation, Goldman could be slapped with a penalty early next year, according to Bloomberg.

The EU accused Prysmian of undertaking action to hamper healthy competition such as the rigging of prices between 1998 and 2008. The EU claimed certain companies including ABB Ltd., Nexans SA and NKT Holding A/S fixed the prices of undersea and underground high-voltage power cables sold to energy providers in Europe for at least 10 years.

In 2005, Goldman Sachs Capital Partners – the private equity arm of Goldman – bought Italian cable maker, Prysmian. In 2007, Prysmian held an initial public offering that resulted in a reduced stake for Goldman in 2009. However, the regulators feel that Goldman still holds enough stake in the Italian cable maker to pay fines.

The regulatory body proclaimed that Goldman would be liable for any fine levied on Prysmian. However, Goldman claimed that it was not aware of Prysmian’s role in rigging prices in share markets when the bank’s private equity arm bought the latter.

However, Goldman’s argument has not been able to convince the EU, as European regulators claimed that parent companies are responsible for any lapse by their subsidiaries as the latter do not take business decisions autonomously.

Litigation-related worries have been plaguing major global banks for quite some time. If Goldman has to pay a fine in the aforementioned matter, it will be a drag on its financials.

Goldman currently carries a Zacks Rank #3 (Hold). Better-ranked banking stocks include BofI Holding, Inc. (BOFI - Snapshot Report), Preferred Bank (PFBC - Snapshot Report) and TriCo Bancshares (TCBK - Snapshot Report). All these stocks carry a Zacks Rank #1 (Strong Buy).

Please login to Zacks.com or register to post a comment.

New to Zacks?

Start Here

Zacks Investment Research

Close

Are you a new Zacks Member or a visitor to Zacks.com?

Top Zacks Features

My Portfolio Tracker

Is it Time to Sell?

One of the most important steps you can take today is to set up your portfolio tracker on Zacks.com. Once you do, you'll be notified of major events affecting your stocks and/or funds with daily email alerts.

More Zacks Resources

Zacks Rank Home - Evaluate your stocks and use the Zacks Rank to eliminate the losers and keep the winners.

Mutual Fund Rank Home - Evaluate your funds with the Mutual Fund Rank for both your personal and retirement funds.

Stock/Mutual Fund Screening - Find better stocks and mutual funds. The ones most likely to beat the market and provide a positive return.

My Portfolio - Track your Portfolio and find out where your stocks/mutual funds stack up with the Zacks Rank.

Zacks #1 Rank Top Movers for Zacks #1 Rank Top Movers

Company Symbol Price %Chg
RPC INC RES 24.91 +8.35%
LITHIA MOTO… LAD 94.59 +4.60%
DELTA AIR L… DAL 39.15 +3.90%
FLAMEL TECH… FLML 14.51 +3.50%
SOUTHWEST A… LUV 28.87 +2.92%