$698 Million Class Action Against Goldman Can Proceed

courthousenews.com

(CN) – A $698 million class action against Goldman Sachs will proceed, after a federal judge certified a class arising “out of a single offering … of certificates derived from a pool of securitized fixed-rate, second-lien home mortgages.”

U.S. District Judge Harold Baer Jr. in Manhattan certified the Public Employees’ Retirement System of Mississippi as representative of a class of more than 150 investors.

“All of the mortgage loans underlying the certificates were originated by New Century Financial Corp. (‘New Century’) and purchased by defendants in late 2005 to be securitized,” according to Baer’s Opinion and Order. “The Second Amended Complaint (‘Complaint’) asserts that the Offering Documents for the Certificates contained untrue statements and omitted material facts …

“Plaintiff contends that New Century failed to follow its own stated underwriting standards and used improper appraisals overstating the collateral value, and that defendants failed to conduct adequate due diligence when acquiring the loans for securitization. Consequently, the statements in the Offering Documents concerning compliance with underwriting and appraisal standards were materially untrue when they were made, and as a result, plaintiff and the class purchased certificates that were far riskier than represented.

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