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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