Goldman Sachs Sued Over Mortgage Bonds

German Banks were the largest buyers of U.S. Subprime – Are they finally starting to sue en masse?

Here is some more from the legal filing:

This is an action for damages, or alternatively, rescission, and/or a declaratory judgment arising from Plaintiff’s investment in residential mortgage-backed securities (the “Securities”) which were securitized by Defendants and sold to Plaintiff by Defendants. Plaintiff purchased $188,583,258 in Securities in the offerings listed on Exhibit A attached hereto (the “Offerings”).

The Securities are either currently held by Plaintiff or were held and sold previously at a loss. Defendants were actively involved in each step of the securitization and sale of the Securities to Plaintiff. Defendants acted as depositor, underwriter, seller, sponsor, and/or broker dealer for the Offerings.

The offering materials issued by Defendants for the Offerings (the “Offering Materials”) contained material misrepresentations and omissions regarding the underwriting standards used to issue the mortgage loans that were pooled together into the Offerings, the transfer of those mortgage loans to trusts formed to hold the pooled loans and to collect interest and principal payments due on the loans, and the legal validity of the trusts and their legal entitlement to receive interest and principal payments on the loans.

The Offering Materials also contained material misrepresentations and omissions regarding key statistical characteristics of the mortgage loans underlying the Securities, including the loans’ loan-to-value ratios and combined loan-to-value ratios, as well as the percentage of owner-occupied properties. The Offering Materials also contained material misrepresentations about the Securities’ credit ratings, which understated the Securities’ risk profile. Each of the Defendants knew, or at a minimum was negligent in not knowing, that its representations and omissions were false and/or misleading at the time they were made. Each Defendant made the false and/or misleading statements with the intent for Plaintiff to rely upon those statements.

Defendants obtained mortgage loans from the originators and created securities from them. The underwriter underwrote the Offerings and sold the Securities to Plaintiff by means of Offering Materials which contained knowing material misrepresentations and omissions.

Alternatively, if the underwriter did not know of material misrepresentation and omissions, then contracts of sale from the underwriter to Plaintiff are void or voidable as a result of mutual mistake.

Plaintiff did not know the true facts regarding Defendants’ misrepresentations and omissions in the Offering Materials, and justifiably relied on those misrepresentations and omissions. Defendants’ wrongdoing has led directly to Plaintiff’s damages, which include loss of market value on the Securities.

Plaintiff’s causes of action against The Goldman Sachs Group, Inc., Goldman Sachs International and Goldman Sachs Real Estate Funding Corp. are at law and at equity for claims including common-law fraud, fraudulent inducement, negligent misrepresentation, aiding and abetting fraud, declaratory judgment, and contract claims, including rescission, restitution and mutual mistake. The depositor identified in Exhibit A is liable for claims including common law fraud, fraudulent inducement, and negligent misrepresentation. The sponsor identified in Exhibit A is liable for claims including common law fraud, fraudulent inducement, and negligent misrepresentation. The underwriter identified in Exhibit A is liable for claims including common law fraud, aiding and abetting fraud, negligent misrepresentation, and contract claims, including rescission, restitution and mutual mistake.

Upon your failure to appear, judgment will be taken against you by default for money damages in an amount of at least $188,583,258, and interest thereon, together with punitive damages of $188,583,258, rescission, rescissory damages, legal fees, and the costs of this action.