Goldman Sachs 2012 Annual Report Download - page 207

Notes to Consolidated Financial Statements
On September 30, 2010, a putative class action was filed in
the U.S. District Court for the Southern District of New
York against GS&Co., Group Inc. and two former
GS&Co. employees on behalf of investors in $821 million
of notes issued in 2006 and 2007 by two synthetic CDOs
(Hudson Mezzanine 2006-1 and 2006-2). The complaint,
which was amended on February 4, 2011, asserts federal
securities law and common law claims, and seeks
unspecified compensatory, punitive and other damages.
The defendants moved to dismiss on April 5, 2011, and the
motion was granted as to plaintiff’s claim of market
manipulation and denied as to the remainder of plaintiff’s
claims by a decision dated March 21, 2012. On
May 21, 2012, the defendants counterclaimed for breach of
contract and fraud. On December 17, 2012, the plaintiff
moved for class certification.
GS&Co., GSMC and GSMSC are among the defendants in
a lawsuit filed in August 2011 by CIFG Assurance of North
America, Inc. (CIFG) in New York Supreme Court, New
York County. The complaint alleges that CIFG was
fraudulently induced to provide credit enhancement for a
2007 securitization sponsored by GSMC, and seeks, among
other things, the repurchase of $24.7 million in aggregate
principal amount of mortgages that CIFG had previously
stated to be non-conforming, an accounting for any
proceeds associated with mortgages discharged from the
securitization and unspecified compensatory damages. On
October 17, 2011, the Goldman Sachs defendants moved to
dismiss. By a decision dated May 1, 2012, the court
dismissed the fraud and accounting claims but denied the
motion as to certain breach of contract claims that were
also alleged. On June 6, 2012, the Goldman Sachs
defendants filed counterclaims for breach of contract. In
addition, the parties have each appealed the court’s
May 1, 2012 decision to the extent adverse. The parties
have been ordered to mediate, and proceedings in the trial
court have been stayed pending mediation.
In addition, on January 15, 2013, CIFG filed a complaint
against GS&Co. in New York Supreme Court, New York
County, alleging that GS&Co. falsely represented that a
third party would independently select the collateral for a
2006 CDO. CIFG seeks unspecified compensatory and
punitive damages, including approximately $10 million in
connection with its purchase of notes and over $30 million
for payments to discharge alleged liabilities arising from its
issuance of a financial guaranty insurance policy
guaranteeing payment on a credit default swap referencing
the CDO.
Various alleged purchasers of, and counterparties involved
in transactions relating to, mortgage pass-through
certificates, CDOs and other mortgage-related products
(including certain Allstate affiliates, Bank Hapoalim B.M.,
Basis Yield Alpha Fund (Master), Bayerische Landesbank,
Cambridge Place Investment Management Inc., the
Charles Schwab Corporation, Deutsche Zentral-
Genossenschaftbank, the FDIC (as receiver for Guaranty
Bank), the Federal Home Loan Banks of Boston, Chicago,
Indianapolis and Seattle, the FHFA (as conservator for
Fannie Mae and Freddie Mac), HSH Nordbank, IKB
Deutsche Industriebank AG, Landesbank Baden-
Württemberg, Joel I. Sher (Chapter 11 Trustee) on behalf of
TMST, Inc. (TMST), f/k/a Thornburg Mortgage, Inc. and
certain TMST affiliates, John Hancock and related parties,
Massachusetts Mutual Life Insurance Company,
MoneyGram Payment Systems, Inc., National Australia
Bank, the National Credit Union Administration, Phoenix
Light SF Limited and related parties, Prudential Insurance
Company of America and related parties, Royal Park
Investments SA/NV, Sealink Funding Limited, Stichting
Pensioenfonds ABP, The Union Central Life Insurance
Company, Ameritas Life Insurance Corp., Acacia Life
Insurance Company, Watertown Savings Bank, and The
Western and Southern Life Insurance Co.) have filed
complaints or summonses with notice in state and federal
court or initiated arbitration proceedings 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.
A number of other entities (including American
International Group, Inc. (AIG), Deutsche Bank National
Trust Company, John Hancock and related parties, M&T
Bank, Norges Bank Investment Management and Selective
Insurance Company) have threatened to assert claims of
various types against the firm in connection with various
mortgage-related transactions, and the firm has entered
into agreements with a number of these entities to toll the
relevant statute of limitations.
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