Goldman Sachs 2015 Annual Report Download - page 212

THE GOLDMAN SACHS GROUP, INC. AND SUBSIDIARIES
Notes to Consolidated Financial Statements
Various alleged purchasers of, and counterparties and
providers of credit enhancement involved in transactions
relating to, mortgage pass-through certificates, CDOs and
other mortgage-related products (including ACA Financial
Guaranty Corp., Aozora Bank, Ltd., Basis Yield Alpha
Fund (Master), the Charles Schwab Corporation, CIFG
Assurance of North America, Inc., the FDIC (as receiver for
Guaranty Bank), IKB Deutsche Industriebank AG,
Massachusetts Mutual Life Insurance Company, Texas
County & District Retirement System and the Tennessee
Consolidated Retirement System) have filed complaints in
state and federal court against firm affiliates, generally
alleging that the offering documents for the securities that
they purchased contained untrue statements of material fact
and material omissions and generally seeking rescission
and/or damages. Certain of these complaints allege fraud
and seek punitive damages. Certain of these complaints also
name other firms as defendants.
Norges Bank Investment Management and Selective
Insurance Company 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 one 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 $3.3 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 $11.1 billion original notional face amount of
securitizations issued by trusts for which they act as
trustees.
Group Inc., Litton Loan Servicing LP (Litton), Ocwen
Financial Corporation and Arrow Corporate Member
Holdings LLC (Arrow), 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. An amended
complaint, filed on November 19, 2013, added an
additional plaintiff and RICO claims. On
September 29, 2014, the court denied without prejudice and
with leave to renew at a later date Group Inc.’s motion to
sever the claims against it and certain other defendants. On
February 2, 2016, the defendants’ motion to dismiss the
action as preempted by the “filed-rate doctrine” under a
recent Second Circuit decision was granted with respect to
certain of the plaintiffs. On January 15, 2016, Group Inc.
and Arrow were added as defendants to a putative class
action in the U.S. District Court for the Northern District of
California based on substantially similar allegations,
asserting RICO claims and violations of California’s Unfair
Competition Law, and seeking similar relief. On
February 10, 2016, Group Inc., Litton and Arrow and the
plaintiffs in the action pending in the Southern District of
New York reached a settlement in principle, subject to
documentation and court approval, which would resolve
the remaining claims in both actions.
200 Goldman Sachs 2015 Form 10-K