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Lloyd Blankfein, chairman and CEO of Goldman SachsCHIP EAST/Reuters

Goldman Sachs Group Inc. chief executive officer Lloyd Blankfein has hired Reid Weingarten, a high-profile Washington defence attorney whose past clients include a former Enron accounting officer, according to a government source familiar with the matter.

Mr. Blankfein, 56, is in his sixth year at the helm of the largest U.S. investment bank, which has spent two years dodging accusations of conflicts of interest and fraud.

The move to retain Mr. Weingarten comes as investigations of Goldman and its role in the 2007-09 financial crisis continue.

The U.S. Securities and Exchange Commission scored a $550-million (U.S.) settlement against the bank in a fraud lawsuit in July, 2010, but other investigations continue.

"Why do you bring in someone like that?" said the source, who was not authorized to speak publicly. "It says one thing: that they're taking it seriously."

Mr. Blankfein has not been charged in any civil or criminal case, and it was not immediately clear why he hired Mr. Weingarten.

Goldman said in a statement on Monday: "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 PSI report hired counsel at the outset."

Mr. Weingarten did not respond to requests for comment.

Goldman shares fell sharply shortly after Reuters reported Mr. Weingarten's hiring, closing down 4.7 per cent at $106.51, their lowest level since March, 2009.

A partner with Steptoe & Johnson LLP, Mr. Weingarten has represented a wide array of clients in criminal cases. They include former WorldCom Inc. chief Bernard Ebbers, who was later convicted, and former Enron accounting officer Richard Causey, who pleaded guilty in exchange for a five- to seven-year prison term.

In May, Mr. Weingarten won the acquittal of former GlaxoSmithKline lawyer Lauren Stevens on charges of lying and obstructing a probe into the company's marketing practices.

"I'm used to these monstrously difficult cases where everybody hates my clients," Mr. Weingarten told AmericanLawyer.com in May, although he described Ms. Stevens as a "beloved figure."

Controversy has continued to swirl around Goldman Sachs and Mr. Blankfein in the aftermath of the credit crisis in which Goldman was accused of favouring some clients over other investors and of sometimes trading against the interest of clients.

The Senate's Permanent Subcommittee on Investigations in April released a scathing report that criticized Goldman for "exploiting" clients by unloading subprime exposure onto unsuspecting clients in 2006 and 2007, and concluded that its top executives misled Congress during testimony in 2010.

The company said it disagreed with many of the report's conclusions, but took seriously the issues addressed.

In June, New York prosecutors subpoenaed the bank to explain some of its actions in the run-up to the financial crisis. It is also the target of probes by the Justice Department, the New York Attorney General and the Securities and Exchange Commission.

It was not immediately clear what charges, if any, Mr. Blankfein could face personally.

One former federal prosecutor, who was not authorized to speak publicly, said Mr. Blankfein may have hired outside counsel after receiving a request from investigators for documents or other information.

The Senate report raised questions about inconsistencies between testimony from Mr. Blankfein and other Goldman executives to Congress and e-mails unearthed in the Senate investigation. The subcommittee's chairman, Senator Carl Levin, has said the question of whether Mr. Blankfein and others committed perjury is up to the relevant federal agencies.

The former prosecutor cautioned that perjury cases were difficult to prove, adding that prosecutors would not bring charges unless they had a "rock solid case."

Goldman earlier in August lowered its estimate for future legal costs to $2-billion from its $2.7-billion estimate three months earlier. It said it expects such costs to remain high for the foreseeable future.

Goldman shares have lost a quarter of their value this year, underperforming the broader stock market and other bank shares.

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