Goldman Sachs 2012 Annual Report Download - page 208

Notes to Consolidated Financial Statements
As of the date hereof, the aggregate notional amount of
mortgage-related securities sold to plaintiffs in active cases
brought against the firm where those plaintiffs are seeking
rescission of such securities was approximately
$20.7 billion (which does not reflect adjustment for any
subsequent paydowns or distributions or any residual value
of such securities, statutory interest or any other
adjustments that may be claimed). This amount does not
include the threatened claims noted above, potential claims
by these or other purchasers in the same or other mortgage-
related offerings that have not actually been brought
against the firm, or claims that have been dismissed.
In June 2011, Heungkuk Life Insurance Co. Limited
(Heungkuk) filed a criminal complaint against certain past
and present employees of the firm in South Korea relating
to its purchase of a CDO securitization from Goldman
Sachs. Heungkuk had earlier initiated civil litigation against
the firm relating to this matter. This civil litigation has now
been settled and, on January 23, 2013, Heungkuk
withdrew the criminal complaint in its entirety.
Group Inc. and GS Bank USA have entered into a Consent
Order and a settlement in principle with the Federal
Reserve Board relating to the servicing of residential
mortgage loans and foreclosure practices. In addition, GS
Bank USA has entered into an Agreement on Mortgage
Servicing Practices with the New York State Department of
Financial Services, Litton and Ocwen. See Note 18 for
information about these settlements.
Group Inc., GS&Co. and GSMC are among the numerous
financial services firms named as defendants in a qui tam
action originally filed by a relator on April 7, 2010
purportedly on behalf of the City of Chicago and State of
Illinois in Cook County, Illinois Circuit Court asserting
claims under the Illinois Whistleblower Reward and
Protection Act and Chicago False Claims Act, based on
allegations that defendants had falsely certified compliance
with various Illinois laws, which were purportedly violated
in connection with mortgage origination and servicing
activities. The complaint, which was originally filed under
seal, seeks treble damages and civil penalties. Plaintiff filed
an amended complaint on December 28, 2011, naming
GS&Co. and GSMC, among others, as additional
defendants and a second amended complaint on
February 8, 2012. On March 12, 2012, the action was
removed to the U.S. District Court for the Northern District
of Illinois, and on September 17, 2012 the district court
granted the plaintiff’s motion to remand the action to state
court. On November 16, 2012, the defendants moved to
dismiss and to stay discovery.
Group Inc., Litton and Ocwen are defendants in a putative
class action filed on January 23, 2013 in the U.S. District
Court for the Southern District of New York generally
challenging the procurement manner and scope of “force-
placed” hazard insurance arranged by Litton when
homeowners failed to arrange for insurance as required by
their mortgages. The complaint asserts claims for breach of
contract, breach of fiduciary duty, misappropriation,
conversion, unjust enrichment and violation of Florida
unfair practices law, and seeks unspecified compensatory
and punitive damages as well as declaratory and
injunctive relief.
The firm has also received, and continues to receive,
requests for information and/or subpoenas from federal,
state and local regulators and law enforcement authorities,
relating to the mortgage-related securitization process,
subprime mortgages, CDOs, synthetic mortgage-related
products, particular transactions involving these products,
and servicing and foreclosure activities, and is cooperating
with these regulators and other authorities, including in
some cases agreeing to the tolling of the relevant statute
of limitations. See also “Financial Crisis-Related
Matters” below.
The firm expects to be the subject of additional putative
shareholder derivative actions, purported class actions,
rescission and “put back” claims and other litigation,
additional investor and shareholder demands, and additional
regulatory and other investigations and actions with respect
to mortgage-related offerings, loan sales, CDOs, and
servicing and foreclosure activities. See Note 18 for further
information regarding mortgage-related contingencies.
206 Goldman Sachs 2012 Annual Report