Goldman Sachs Mortgage-Backed Securities Suit Granted Class-Action Status

U.S. District Judge Harold Baer Jr. granted a request by the Public Employees’ Retirement System of Mississippi to let it represent more than 150 investors in the offering, according to an opinion Baer gave to the parties yesterday. The opinion hasn’t been released publicly, and a clerk in Baer’s chambers declined to provide a copy today.

The plaintiffs say New Century Financial Corp., which originated the mortgages underlying the securities, failed to adhere to its underwriting standards and overstated the value of the collateral backing the loans. They say Goldman Sachs didn’t conduct proper due diligence when it bought the loans in 2005. The plaintiffs are seeking unspecified damages.

Michael Duvally, a spokesman for New York-based Goldman Sachs, didn’t immediately return a call seeking comment on the ruling.

Class-action status allows the investors to pool financial and legal resources, giving them greater leverage to win a favorable settlement or verdict. In his ruling, Baer appointed the New York-based Bernstein Litowitz Berger & Grossman LLP as class counsel.

The case is Public Employees’ Retirement System of Mississippi v. Goldman Sachs Group Inc., 09-01110, U.S. District Court, Southern District of New York (Manhattan).
(Bloombergnews)

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