Goldman to pay $26.6 mln in mortgage debt class-action

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Goldman to pay $26.6 mln in mortgage debt class-action

Goldman to pay $26.6 mln in mortgage debt class-action

Bloomberg-

Goldman Sachs Group Inc has agreed to pay $26.6 million to settle a lawsuit by investors who claimed they were misled into buying securities backed by risky loans from the now-defunct subprime mortgage lender New century Financial Corp.

Investors led by the Public Employees’ Retirement System of Mississippi claimed that Goldman’s boilerplate disclosures for the $698 million GSAMP Trust 2006-S2 were false and misleading by failing to reveal how New Century had ignored its own underwriting standards and used inflated appraisals.

They also faulted Goldman’s due diligence for failing to find the problems when it bought New Century loans and packaged them into securities for the 2006 offering. New Century went bankrupt the following year.

Goldman spokeswoman Tiffany Galvin declined to comment.

The case is one of many in which investors sought to hold banks responsible for allegedly misleading them about the quality of mortgage securities that they sold.

[BLOOMBERG]

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