, the U.S. Supreme Court rescinded the bid filed by
The Goldman Sachs Group Inc.
) regarding the dismissal of a lawsuit, accusing it of selling
risky debts via misleading statements. The plaintiffs are allowed
to pursue the proceedings over their claims against Goldman
pertaining to the offering of mortgage-backed securities,
underwritten and issued by the bank.
The aforesaid lawsuit has been filed by the institutional
investor, NECA-IBEW Health & Welfare Fund. The complaints
claimed that Goldman deceptively sold the sub-prime
mortgage-linked securities that gradually failed. Moreover, it
misrepresented the value of instruments by providing materially
Notably, the fund alleged Goldman of committing forgery in 17
offerings of mortgage-backed certificates. The bank denied the
accusations and commented that the fund invested in only two of
the 17 offerings, and therefore legal claims can be demanded
against those two offerings only.
However, in 2012, N.Y.-based Second U.S. Circuit Court of Appeals
permitted NECA to file a lawsuit even against the remaining 15
offerings - in which the fund has not invested. Consequently,
NECA came up with this lawsuit.
Among other major banks,
JPMorgan Chase & Co.
Bank of America Corporation
) have also been legally accused for distorting documents related
to mortgage-backed securities and other losses earlier.
The continuously increasing number of lawsuits is sure to dent
banks' reputation and financial conditions. However, investors,
who have lost their hard-earned money in such investments, should
Goldman currently retains a Zacks Rank #3 (Hold).
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