Goldman Sachs Class Action Lawsuit Filed Over Two CDO Securities

|
Staff Writers

Add Your Comments

A financial fraud lawsuit has been filed against Goldman Sachs over its Hudson Mezzanine securities, claiming that the company created collateralized debt obligation (CDO) securities that were doomed to fail so that it could profit from short positions it had taken on the funds. 

The Goldman Sachs class action lawsuit (pdf) was filed on September 30 in the U.S. District Court for the Southern District of New York by Dodona I, LLC. The lawsuit names Goldman Sachs, Hudson Mezzanine Funding, Corp., Peter L. Ostrem and Darryl K. Herrick as defendants. The two men were vice presidents in Goldman’s structured products CDO group and helped manage, structure and sell the CDOs, the lawsuit claims.

According to the complaint, the two Hudson Mezzanine collateralized debt obligation securities, known as the Hudson 1 and 2 CDOs, constituted financial fraud and relied heavily on subprime mortgage-backed securities. The lawsuit against Goldman Sachs claims that it sold the securities to investors under the expectation that the securities would fail, and had set itself up to profit from the failure. The two securities were downgraded steadily in value from 2007 through 2008 as the subprime mortgage market collapsed.

Do You Know about…

Spinal Cord Stimulator lawsuits

Spinal cord stimulator lawsuits are being investigated for individuals who suffered unnecessary shocks, burns or other problems, often resulting in the need for additional surgery to remove the SCS.

Learn More
SEE IF YOU QUALIFY FOR COMPENSATION
Spinal-Cord-Stimulation-Lawsuit
Spinal-Cord-Stimulation-Lawsuit

Do You Know About…

Spinal Cord Stimulator lawsuits

Spinal cord stimulator lawsuits are being investigated for individuals who suffered unnecessary shocks, burns or other problems, often resulting in the need for additional surgery to remove the SCS.

Learn More
SEE IF YOU QUALIFY FOR COMPENSATION

Goldman Sachs is under investigation by the U.S. Department of Justice (DOJ) and the U.K. Financial Services Authority over similar claims regarding its Abacus CDOs, the lawsuit claims. It faces a class action lawsuit over those CDOs as well. In July, the company settled a fraud lawsuit by the U.S. Security Exchange Commission (SEC) over the Abacus CDOs for $550 million and agreed to make company reforms on how it offered mortgage-backed securities in the future.

The Hudson CDO class action lawsuit is seeking to represent anyone who invested in the CDOs from their inception until September 30, 2010. The lawsuit accuses the defendants of seven counts of financial fraud and seeks unspecified compensatory, punitive damages and court costs for all investors who suffered financial loss.

Tags: Financial Fraud, Goldman Sachs, Investor Lawsuit, New York
Image Credit: |

More Lawsuit Stories

0 Comments

This field is for validation purposes and should be left unchanged.

Share Your Comments

This field is hidden when viewing the form
I authorize the above comments be posted on this page
Post Comment
Weekly Digest Opt-In

Want your comments reviewed by a lawyer?

To have an attorney review your comments and contact you about a potential case, provide your contact information below. This will not be published.

NOTE: Providing information for review by an attorney does not form an attorney-client relationship.

MORE TOP STORIES

Lawsuit Claims FanDuel, DraftKings Caused Compulsive Gambling, Addiction and Financial Losses
A former FanDuel employee has filed a lawsuit against several online gambling apps, claiming they use false advertising and data collection to foster addiction in U.S. consumers.
Abbott Faces Joint Spinal Cord Stimulator Lawsuit Filed by 17 Patients
Lawsuit alleges Abbott Laboratories sold defective spinal cord stimulators that left 17 patients with worsening pain and neurological injuries.
Chlorpyrifos-Insecticide-Parkinsons-Disease-Lawsuit
A former pest control worker has filed a chlorpyrifos lawsuit alleging that decades of mixing and spraying the insecticide caused Parkinson’s disease, as lawyers investigate similar claims involving routine occupational and agricultural exposure.