Goldman Sachs Hit With Class-Action Suit Over Mortgage-Backed Securities
Nov 9th 2010 8:30PM
Updated Nov 9th 2010 8:40PM
Investors have filed a class-action lawsuit against Goldman Sachs (GS), the investment bank said in regulatory filings Tuesday.
The complaint alleges that Goldman didn't disclose that it had structured its debt products -- specifically collateralized debt obligations, released in 2006 and 2007, called the Hudson Mezzanine -- so that it would profit when they fell in value, essentially betting against its customers.
The debt involves about $1.2 billion worth of subprime and other residential mortgage-backed securities, The Wall Street Journal reported. The lawsuit isn't the first one Goldman has faced over disclosures; nor is it likely to be the last. Goldman, which already faces a similar shareholder lawsuit, filed back in April, says in its filing that it expects more lawsuits to come.
Goldman is one of several banks that have recently said they expect to be sued for their role in the recent mortgage crisis. Last week, Bank of America (BAC) said it's facing lawsuits alleging that documents relating to more than $375 billion in mortgage-backed securities may have contained misrepresentations and omissions and failed to meet underwriting standards.