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Investor says may appeal lost arbitration against Goldman

Traders work on the floor of the New York Stock Exchange near the Goldman Sachs stall July 16, 2010. REUTERS/Brendan McDermid

(Reuters) – The founder of a medical devices company who racked up losses of $1.4 million in a Goldman Sachs Group Inc private debt fund is considering whether to appeal an arbitration ruling against him.

Traders work on the floor of the New York Stock Exchange near the Goldman Sachs stall July 16, 2010. REUTERS/Brendan McDermid

Richard Caruso, who launched Integra LifeSciences Holdings Corp in 1989, filed an arbitration case against the Wall Street firm in 2009, alleging misrepresentation, fraud and other causes of action. The case was filed in the name of Caruso’s family investment vehicle, Athena Venture Partners LP.

Last week, Financial Industry Regulatory Authority (FINRA) arbitrators rejected Caruso’s claim in its entirety.

A Goldman Sachs spokeswoman said the firm “prevailed entirely” in the arbitration. “The panel rejected every claim asserted and found each of them to be ‘clearly erroneous’ and ‘false,'” she said in a statement.

Caruso said Goldman first approached him about the fund in 2007. He said he decided to invest based on information he and Athena’s general partner received in a written summary and discussions with Goldman advisers. But he alleged that the strategy Goldman pitched, while risky, was different from the one it used.

In their ruling, however, the arbitrators said the misrepresentation claims were not supported by evidence.

Athena’s $5 million investment in the distressed debt fund lost roughly 50 percent of its value during the 2008 credit crisis, according to Caruso’s lawyer, David Moffitt of Saul Ewing LLP in Wayne, Pennsylvania. Those losses declined to about $1.4 million after Goldman shifted its strategy, Moffitt said.

Caruso is now president of The Provco Group, a Villanova, Pennsylvania-based venture capital and business finance consultancy. Caruso became a Goldman client about 13 years ago.

(Reporting by Suzanne Barlyn; Editing by Gary Hill)

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