(CNN) Goldman Sachs CEO lawyers up

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Trouble at Goldman Sachs. Their stock went from $140 in mid-july to $106.51 yesterday (type GS at symbol). If the banks go, that's it, in a highly financialized economy.

Goldman Sachs CEO lawyers up
By Charles Riley @CNNMoney August 22, 2011: 5:39 PM ET

NEW YORK (CNNMoney) -- Goldman Sachs CEO Lloyd Blankfein has retained the services of prominent defense attorney Reid Weingarten.
Investors did not take the news well. Goldman (GS, Fortune 500) shares plunged in the final minutes of trading, following a report published late Monday by Reuters. Shares dropped almost 5% to $106.51 -- a fresh 52-week low. The stock lost another 1.5% in trading after the close.

Weingarten, an attorney at Steptoe & Johnson, is one of the nation's premier white-collar crime attorneys. He represented WorldCom CEO Bernard Ebbers and former Enron accountant Richard Cause, among others.

In a statement to CNNMoney, Goldman spokesman David Wells confirmed that Blankfein has retained counsel.

"As is common in such situations, Mr. Blankfein and other individuals who were expected to be interviewed in connection with the Justice Department's inquiry into certain matters raised in the [Senate Permanent Subcommittee on Investigations] report hired counsel at the outset," Wells said.

In April, the Senate Permanent Subcommittee on Investigations released a report that was very critical of Goldman's activities in the housing market, saying the firm had misled both clients and Congress.

The subcommittee singled out Goldman and Deutsche Bank (DB) as examples of Wall Street firms that reaped huge profits by marketing securities backed by subprime mortgages as safe investments to clients, even as the banks bet against these very same securities.

Last year, Goldman paid the Securities and Exchange Commission $550 million to settle charges of defrauding investors in a sale of securities tied to subprime mortgages.

The SEC alleged that New York-based Goldman and one of its vice presidents, Fabrice Tourre, failed to disclose conflicts in a 2007 sale of a so-called collateralized debt obligation dubbed Abacus.

A message left for Weingarten at his Washington, D.C., office was not immediately returned.

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