In 2004, Jerome Goodman turned to Goldman Sachs for investment advice. At the time he had $12 million invested in Bernie Madoff’s fund and thought he needed to diversify his investments.

According the lawsuit Goldman recommended removing $5 million of the $12 million from the Madoff Fund and putting it in a Goldman Sachs hedge fund.

But Goodman ignored their advice and kept all $12 million invested with Madoff. When Madoff went bust in 2008 so did Goodman – he lost everything according to the suit.

Goodman is claiming that Goldman Sachs breached its fiduciary duty by not following through on his request for a diversified portfolio.

Law.com: “Despite having actual knowledge of Goodman’s over-concentrated and highly risky portfolio, Goldman Sachs failed to warn Jerry Goodman that his portfolio was dangerously over-concentrated in a single investment, and did not recommend (much less insist, as it should have) that Jerry Goodman diversify his over-concentrated and highly risky portfolio across a broad range of suitable asset classes,” the suit says.

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It’s hard not to feel sympathy for someone who lost everything to Madoff but Goodman’s chances of success aren’t looking great. One of the key points in his case is that Goldman had an internal ban on Madoff investments so should have done more to warn him. However, a lawyer for Goldman Sachs has suggested that this is a factual error.

Law.com: “The company never instituted an internal ban on Madoff, so there is no merit to the allegation that the company failed to divulge information”, says C. Evan Stewart of Zuckerman Spaeder in New York.

So it’s looking a bit desperate no matter how much finance haters might want him to stick a pitchfork into the vampire squid.

Hat tip TBI