Goldman Sachs 2013 Annual Report Download - page 210

Notes to Consolidated Financial Statements
A number of other entities (including John Hancock and
related parties, Norges Bank Investment Management,
Selective Insurance Company and Texas County & District
Retirement System) have threatened to assert claims of
various types against the firm in connection with the sale of
mortgage-related securities. The firm has entered into
agreements with a number of these entities to toll the
relevant statute of limitations.
As of the date hereof, the aggregate amount of mortgage-
related securities sold to plaintiffs in active and threatened
cases described in the preceding two paragraphs where
those plaintiffs are seeking rescission of such securities was
approximately $17.9 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 potential claims by these or other
purchasers in the same or other mortgage-related offerings
that have not been described above, or claims that have
been dismissed.
The firm has entered into agreements with Deutsche Bank
National Trust Company and U.S. Bank National
Association to toll the relevant statute of limitations with
respect to claims for repurchase of residential mortgage
loans based on alleged breaches of representations related
to $11.4 billion original notional face amount of
securitizations issued by trusts for which they act
as trustees.
Group Inc., Litton, Ocwen and Arrow Corporate Member
Holdings LLC, a former subsidiary of Group Inc., are
defendants in a putative class action pending since
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 second
amended complaint, filed on November 19, 2013, added an
additional plaintiff and RICO claims. On
January 21, 2014, Group Inc. moved to sever the claims
against it and certain other defendants.
On February 25, 2013, Group Inc. was added as a
defendant through an amended complaint in a putative
class action, originally filed on April 6, 2012 in the U.S.
District Court for the Southern District of New York,
against Litton, Ocwen and Ocwen Loan Servicing, LLC
(Ocwen Servicing). The amended complaint generally
alleges that Litton and Ocwen Servicing systematically
breached agreements and violated various federal and state
consumer protection laws by failing to modify the mortgage
loans of homeowners participating in the federal Home
Affordable Modification Program, and names Group Inc.
based on its prior ownership of Litton. The plaintiffs seek
unspecified compensatory, statutory and punitive damages
as well as declaratory and injunctive relief. On
April 29, 2013, Group Inc. moved to dismiss.
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,
including members of the RMBS Working Group, 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 “Regulatory Investigations and
Reviews and Related Litigation” 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 information regarding mortgage-related contingencies
not described in this Note 27.
208 Goldman Sachs 2013 Annual Report