On February 13, 2015, the plaintiffs in New Jersey Carpenters Health Fund, et al., v. Residential Capital, LLC, et al., No. 08-cv-8781 (S.D.N.Y.) filed an unopposed motion for certification of the class and to approve a preliminary settlement. The complaint, originally filed in 2008, included claims for materially false and misleading statements in securities offering documents under the Securities Act of 1933 against Citigroup, Goldman Sachs, and UBS as underwriters for 16 mortgage-backed securities transactions in 2006 and 2007. The class consists of investors who purchased the certificates, with the majority of the settlement funds set aside for investors who purchased their certificates within ten days after the relevant initial offering. The proposed $235 million settlement does not include a $100 million settlement with Residential Capital, LLC that had previously been reached in the case. Motion.
On February 6, 2015, plaintiffs Union Central Life Insurance, Ameritas Life Insurance, and Acacia Life Insurance filed a letter with the court stating that they had reached an agreement with Goldman Sachs to settle claims arising out of the insurance companies’ investments in RMBS sponsored by Goldman Sachs. The details of the settlement are not public. The plaintiffs had asserted causes of action for violations of federal securities laws as well as for common law fraud, negligent misrepresentation, and unjust enrichment. Letter.
On August 22, Goldman Sachs and FHFA announced a US$3.15 billion settlement of claims brought by FHFA against Goldman in two separate lawsuits related to RMBS purchased by Fannie Mae and Freddie Mac between 2005 and 2007. FHFA, as conservator for Fannie Mae and Freddie Mac, asserted claims for violations of federal and state securities law on the basis of alleged material misrepresentations or omissions in the offering documents for the RMBS sold to Fannie Mae and Freddie Mac. As part of the settlement, Goldman is repurchasing most of the RMBS at issue. Goldman did not admit any liability or wrongdoing as part of the settlement. Fannie Mae Agreement. Freddie Mac Agreement.
On January 6, Judge Susan D. Wigenton of the United States District Court for the District of New Jersey “so ordered” the parties’ stipulation of voluntary dismissal with prejudice of Prudential’s claims against Goldman Sachs after the parties reached an undisclosed settlement. Prudential and its affiliates had sued Goldman Sachs and its affiliates for alleged material misrepresentations and omissions in the offering materials for more than $375 million in RMBS. Prudential asserted claims for common law fraud and fraudulent inducement, negligent misrepresentation, equitable fraud and New Jersey civil RICO violations. Order.
On November 26, Justice Melvin Schweitzer of the New York Supreme Court granted in part and denied in part Goldman Sachs’s motion to dismiss a lawsuit brought by HSH Nordbank. Justice Schweitzer dismissed claims arising out of alleged misstatements regarding assignment and transfer of the mortgages underlying the RMBS at issue and the credit ratings assigned to the RMBS, holding that HSH Nordbank had not adequately alleged such statements were knowingly false when made. Justice Schweitzer also dismissed HSH Nordbank’s negligent misrepresentation claim, finding no special duty between Goldman Sachs and HSH Nordbank that could support such a cause of action. Justice Schweitzer allowed the remaining claims and allegations to proceed, including claims for fraud, fraudulent concealment, aiding and abetting fraud and rescission. In particular, he denied Goldman Sachs’s argument that the lawsuit was time-barred under German law, hold that HSH Nordbank’s knowledge of the existence of its claims was a question of fact not capable of resolution at the pleading stage. Justice Schweitzer also held that the complaint adequately alleged misrepresentations concerning compliance with underwriting guidelines, loan to value ratios and occupancy status. Order.
On December 2, the Fed announced that it has not objected to re-submitted capital plans from The Goldman Sachs Group, Inc. and JPMorgan Chase & Co. that were required pursuant to the Fed’s 2013 Comprehensive Capital Analysis and Review. Press Release.
On July 3, Phoenix Light SF Limited, Blue Heron Funding Ltd., Silver Elms CDO II Limited and Kleros Preferred Funding V PLC, filed a complaint against Goldman Sachs in the Supreme Court of the State of New York relating to more than $450 million of RMBS certificates purchased between 2005 and 2007. Plaintiffs allege that Goldman Sachs disseminated offering documents containing false and misleading information regarding collateral quality and underwriting standards. Plaintiffs further allege that Goldman failed to disclose that it shorted the same certificates it offered. The complaint alleges fraud, fraudulent inducement, aiding and abetting fraud, and negligent misrepresentation, and seeks compensatory damages, punitive damages, rescission and/or rescissory damages and costs. Complaint.
On April 9, Judge Susan Wigenton of the U.S. District Court for the District of New Jersey denied Goldman Sachs’s motion to dismiss Prudential’s complaint alleging fraud in connection with the sale of $375 million in RMBS. Goldman argued that Prudential cannot bring claims under New Jersey state laws because Goldman is based in New York and the alleged misrepresentation and omissions at issue were contained in offering materials drafted and disseminated from New York. Judge Wigenton concluded it was premature to make a choice of law determination and held that Prudential had adequately pleaded its fraud, negligent misrepresentation, civil RICO and RICO conspiracy claims under New Jersey law. Decision.
On January 29, Bank Hapoalim B.M., Israel’s largest bank, filed summonses with notice against UBS AG, Goldman Sachs & Co., and their affiliates, in the Supreme Court for the State of New York. In both actions, Bank Hapoalim alleges that the offering documents for RMBS it purchased contained material misrepresentations and omissions concerning the underwriting standards for the mortgages underlying the securities, the transfer of mortgage loans, the legal validity of the trusts, and the statistical information about the mortgage loans underlying the securities. Bank Hapoalim asserts causes of action for common-law fraud, fraudulent inducement, negligent misrepresentation, aiding and abetting fraud, declaratory judgment, and rescission against both UBS and Goldman Sachs, and additional claims for violations of the Securities Act of 1933 against Goldman Sachs. Bank Hapoalim seeks approximately $116 million in damages from UBS and $106 million in damages from Goldman Sachs, inclusive of punitive damages. UBS Summons with Notice. Goldman Sachs Summons with Notice.
CIFG Assurance North America, Inc. (CIFG) filed a summons with notice against Goldman, Sachs & Co. (Goldman) in New York State Supreme Court on December 4, 2012. CIFG alleges that Goldman fraudulently induced CIFG to provide a financial guaranty insurance policy on a credit default swap in connection with the Fortius II CDO. CIFG alleges that Goldman did not disclose that the CDO manager, Aladdin Capital Management, was acting at Goldman’s behest to include in the CDO particular collateral, including RMBS that Goldman wanted to sell. CIFG asserts claims for fraud and for material misrepresentation in the inducement of an insurance contract. It is seeking reimbursement of the nearly $34 million dollars it allegedly paid under the policy it issued when the Fortius II CDO failed. Summons.