Goldman Sued Over Kinder Morgan, El Paso Deal: Report

Goldman Sachs(GS) is being sued by a pension fund over its allegedly "conflicted" role in Kinder Morgan's(KMI) $21 billion takeover of El Paso(EP), Bloomberg News reported.

Goldman was advising El Paso on a possible spinoff of its exploration and production unit to shareholders.In August, Kinder Morgan, in which Goldman owns a 20% stake, approached El Paso to discuss a possible takeover, derailing the plan for spinoff. Morgan Stanley(MS) acted as El Paso's adviser to the deal. Still, Goldman continued to act as financial adviser on "related matters" in connection with the transaction, which "tainted the process," according to the complaint filed by the lawyers for Louisiana Municipal Police Employees Retirement System. "The El Paso board impermissibly heeded the advice of its conflicted financial adviser Goldman Sachs and abandoned a previously announced spinoff of its exploration and production business in favor of a low premium sale to competitor Kinder Morgan," the complaint said, according to the report. The complaint accuses Goldman of aiding and abetting a breach of fiduciary duty by El Paso directors, according to the report. In addition to seeking unspecified damages, the suit is asking the judge to order the directors to explore other alternatives for the company.A Goldman Sachs spokesperson would not comment on the lawsuit to Bloomberg, but said that Goldman had recused itself from the deal process.>To follow the writer on Twitter, go to http://twitter.com/shavenk.>To submit a news tip, send an email to: tips@thestreet.com. >To order reprints of this article, click here: Reprints