Home / News / Government / Goldman Sachs Asks Court to Dismiss Class Action Securities Suit
Print This Post Print This Post

Goldman Sachs Asks Court to Dismiss Class Action Securities Suit

""Goldman Sachs"":http://www.goldmansachs.com/ is asking the U.S. Supreme Court to dismiss a mortgage securities class action lawsuit that the company says could cost Wall Street tens of billions of dollars, according to a report from ""Reuters"":http://www.reuters.com/article/2012/11/02/us-usa-court-goldman-idUSBRE8A118120121102.


The bank is facing a suit from the NECA-IBEW Health & Welfare Fund, which owned mortgage-backed certificates underwritten by Goldman. The fund is suing on behalf of investors who say they were misled about the securities' risk, Reuters reports.

The 2nd U.S. Circuit Court of Appeals in New York decided in September to allow the lawsuit to go ahead on the basis that the NECA-IBEW is acting for investors whose claims ""implicate the same set of concerns"" as its own. Goldman's lawyers are arguing against that decision, saying the court created a conflict with a federal appeals court decision out of Boston ruling that a plaintiff could not sue over securities not purchased by that plaintiff.

Goldman is represented in the case by Theodore Olson, a partner at Gibson, Dunn & Crutcher and former U.S. solicitor general. In a brief, Olson says the decision here could make other institutions vulnerable, harming Wall Street.

""In the context of mortgage-backed securities litigation in which this case arises, the decision will effectively increase by tens of billions of dollars the potential liability that financial institutions face in this and similar class actions,"" the brief says. ""Moreover, the new standard threatens to expand the scope of class actions in many other areas of the law.""

Indeed, the Supreme Court's decision may have a more immediate effect on a similar case faced by JPMorgan Chase. According to Reuters, the bank has asked a judge to put its case on hold while the Supreme Court examines Goldman's appeal.

About Author: Tory Barringer

Tory Barringer began his journalism career in early 2011, working as a writer for the University of Texas at Arlington's student newspaper before joining the DS News team in 2012. In addition to contributing to DSNews.com, he is also the online editor for DS News' sister publication, MReport, which focuses on mortgage banking news.

Check Also

HUD Reports on Health of Mutual Mortgage Insurance Fund

The Department has no near-term plans to change FHA’s mortgage insurance premium pricing. Secretary Marcia Fudge discusses that and more.

Your Daily Dose of DS News

Get the news you need, when you need it. Subscribe to the Daily Dose of DS News to receive each day’s most important default servicing news and market information, absolutely free of charge.