A federal judge says shareholders can proceed with a lawsuit
accusing Goldman Sachs Group of concealing conflicts of interest in several
collateralized debt obligation transactions, the fallout from which caused
Goldman's stock price to drop.
The lawsuit in Manhattan federal court consolidates claims
from Goldman[GS 93.52 -0.38
(-0.4%) ] shareholders who said
the firm failed to disclose it was betting against its clients by taking short
positions in four CDO transactions it sold to investors.
U.S. District Judge Paul Crotty ruled Thursday that
investors could proceed with claims that Goldman should have disclosed those
positions to clients, as well as hedge fund Paulson & Co.'s alleged role in
hand-picking risky subprime mortgages that went into one of the CDOs, known as
Abacus.
According to the complaint, Goldman's actions caused its
shares to trade at inflated levels….
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