Goldman not negligent in arranging Dragon sale: jury

A jury said on Wednesday that Goldman Sachs Group Inc was not negligent in the $580 million sale of Dragon Systems Inc to Lernout & Hauspie, which collapsed afterward in a massive accounting fraud scandal.

The jury said that Goldman, the New York investment bank, did not make negligent misrepresentations during the sale process, according to the verdict announced in the civil case in U.S. District Court in Boston.

Dragon founders Jim and Janet Baker, pioneers in the field of speech recognition software, accused Goldman investment bankers of being negligent in the 2000 sale of their company to Belgium-based Lernout & Hauspie. The Bakers and two early Dragon employees sought several hundred million dollars in damages.

But lawyers for Goldman said it wasn't the investment bank's job to sniff out the accounting fraud that ultimately doomed Lernout & Hauspie and made the remaining stock held by the Bakers worthless. The Bakers owned 51 percent of the company but only were able to sell a few million dollars worth of L&H stock before the collapse.

(Reporting by Tim McLaughlin; Editing by Phil Berlowitz)