Goldman must face mortgage debt claims - 2nd Circuit

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Goldman must face mortgage debt claims – 2nd Circuit

Goldman must face mortgage debt claims – 2nd Circuit

Reuters-

A federal appeals court in New York has revived a lawsuit accusing Goldman Sachs Group Inc of misleading investors about the risks associated with mortgage securities offerings.

The 2nd U.S. Circuit Court of Appeals in New York said lead plaintiff NECA-IBEW Health & Welfare Fund, which owned some mortgage-backed certificates underwritten by Goldman, may pursue claims on behalf of a class of investors in certificates backed by mortgages originated by the same lenders.

It also said the fund need not allege an out-of-pocket loss to pursue a claim that an illiquid security had lost value.

Thursday’s decision reversed parts of rulings by U.S. District Judge Miriam Goldman Cedarbaum in Manhattan, and reinstates claims related to seven securities offerings in 2007.

It is a setback for Goldman, which like its rivals, faces hundreds or thousands of lawsuits by mortgage debt investors. These investors typically seek to recoup losses on securities they bought by claiming they were misled about the risks.

[REUTERS]

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