Goldman Sachs Sued by BayernLB Over Mortgage Bond Losses

Goldman Sachs Group Inc. (GS) was sued by German lender Bayerische Landesbank and accused of fraud over losses on mortgage-backed securities.

BayernLB, which bought about $511.9 million in securities in 16 offerings that Goldman Sachs underwrote, said the securities were riskier than promised and were “destined to fail,” according to a complaint filed yesterday in New York State Supreme Court.

“BayernLB has suffered significant losses as a result of Goldman Sachs’s fraud,” the lender said.

Goldman Sachs and Citigroup Inc. (C) were sued separately yesterday in the same court over mortgage bonds by IKB Deutsche Industriebank AG. (IKB) IKB, a German lender, said it sold $137.4 million in Citigroup securities and $73.2 million in Goldman Sachs securities at a loss.

UBS AG, based in Zurich, was also sued in New York state court over losses on mortgage-backed securities. The plaintiff, Sealink Funding Ltd., said in its complaint that the $158.1 million in bonds are either held by Sealink or were previously sold at a loss.

Claims against Citigroup, Goldman Sachs and UBS include fraud and negligent misrepresentation, according to the filings.

Danielle Romero-Apsilos, a spokeswoman for New York-based Citigroup; Michael DuVally, a spokesman for New York-based Goldman Sachs; and UBS spokeswoman Karina Byrne declined to comment on the filings.

The cases are Bayerische Landesbank v. Goldman Sachs Group Inc., 653111-2012; IKB International SA in Liquidation v. Citigroup Inc., 653100-2012; IKB International SA in Liquidation v. Goldman Sachs Group Inc., 653101-2012; and Sealink Funding Ltd. v. UBS AG, 653102-2012, New York State Supreme Court (Manhattan).

To contact the reporter on this story: David McLaughlin in New York at dmclaughlin9@bloomberg.net

To contact the editor responsible for this story: John Pickering at jpickering@bloomberg.net

Press spacebar to pause and continue. Press esc to stop.

Bloomberg reserves the right to remove comments but is under no obligation to do so, or to explain individual moderation decisions.

Please enable JavaScript to view the comments powered by Disqus.