Goldman Sachs to face securities fraud class action

A U.S. District Judge has ruled that Goldman Sachs must again face a class action by shareholders.

Reuters reports that the shareholders had lost $13 billion because Goldman Sachs hid conflicts of interest when creating risky subprime securities before the 2008 financial crisis.

The Judge, Paul Crotty, in Manhattan rejected Goldman’s claim that its general statements about its business misled investors and affected its stock price.

Reuters reports that shareholders accused Goldman of concealing its packaging and selling of collateralized debt obligations it wanted to fail so favored clients like hedge fund billionaire John Paulson could secretly bet against them.

Goldman had reached a $550 million settlement in 2010 resolving U.S. Securities and Exchange Commission charges it concealed Paulson’s role in creating the Abacus 2007-AC1 CDO, and that he made $1 billion betting against it.


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