Goldman Sachs told to defend against class action
Updated: Monday, 18 Mar 2013 14:02
Goldman Sachs Group Inc has suffered a defeat as the US Supreme Court let stand a decision forcing it to defend against a class action lawsuit claiming it misled investors about the risks associated with mortgage securities.
Without comment, the court refused to consider Goldman's appeal of a September 2012 decision by the 2nd US Circuit Court of Appeals in New York.
The appeals court allowed the NECA-IBEW Health & Welfare Fund, an electrical workers union' pension fund that owned some mortgage-backed certificates underwritten by Goldman, to sue on behalf of investors in certificates backed by mortgages from the same lenders, even though the fund did not own the other certificates.
Typically, named class action plaintiffs may litigate on behalf of a class over claims they cannot bring themselves, so long as the claims relate closely to their own claims.
Goldman and its rivals have faced thousands of lawsuits by investors seeking to recoup losses on mortgage securities, a leading cause of the 2007 and 2008 credit and financial crises.
The bank has said that letting the 2nd Circuit decision stand could cost Wall Street tens of billions of dollars.
Neither Goldman officials nor lawyers for the NECA-IBEW fund were immediately available for comment.
The case is Goldman Sachs v. NECA-IBEW Health & Welfare Fund, US Supreme Court, No. 12-528.