Overview
Goldman Sachs today moved for summary judgment in a shareholder class action (covered previously here) accusing the firm of making various public statements about its business practices that were allegedly fraudulent in light of Goldman allegedly later structuring CDOs to fail.
For one of those CDOs, called ABACUS, Goldman settled with the SEC for $550 million and admitted it was a “mistake” to not disclose the role of a short investor, Paulson, in structuring the deal. In the motion papers today, Goldman argued that this “mistake” did not render false various generalized claims about its business practices :
Although not disclosing Paulson’s involvement in selecting the ABACUS Reference Portfolio was a “mistake”—as Goldman Sachs conceded—that isolated “mistake” was not an intentional, much less widespread, failure to abide by Goldman Sachs’ conflicts controls or business principles, let alone sufficient to render false general statements about the Firm’s business principles and conflicts controls across a four-year period.Goldman’s motion liberally cites a decision by Judge Marrero in a case (covered here) raising similar theories. In that case, brought by a CDO investor, Judge Marrero found that Goldman had no duty to disclose its internal strategy and that the risks of conflicts were adequately disclosed. The case is before Judge Crotty.
