Goldman Sachs $272 Million Mortgage Pact Approved By Judge

  • Investors sued in 2008 citing credit quality information
  • Federal judge in New York rules settlement is reasonable

A federal judge approved Goldman Sachs Group Inc.’s $272 million settlement with investors who claimed the bank misled them about the safety of billions of dollars worth of residential mortgage-backed securities.

U.S. District Judge Loretta Preska in Manhattan on Monday allowed the settlement, reached in August, to go forward, finding it is fair, adequate and reasonable.

The bank was sued in 2008 by pension funds led by NECA-IBEW Health & Welfare Fund of Illinois. The investors claimed Goldman Sachs provided inaccurate information about the appraisals and credit quality of home loans underlying the securities, whose value collapsed in the 2008 financial crisis.

Goldman denied wrongdoing and claimed it acted properly at all times.

The settlement was among the last of a group of investor class actions against banks tied to the credit crisis. They had been triggered by home loan failures and the bankruptcy of Lehman Brothers Holdings Inc. 

Goldman Sachs in 2014 agreed to buy back almost $3.2 billion in mortgage bonds from Fannie Mae and Freddie Mac to settle claims by the Federal Housing Finance Agency, which sued on behalf of the government lenders.

The case is NECA-IBEW Health & Welfare Fund v. Goldman Sachs & Co., 08-cv-10783, U.S. District Court, Southern District of New York (Manhattan).

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