A blow has been struck against a Goliath of finance.
The Supreme Court of the United States has decided that it will not hear an appeal brought by Goldman Sachs for the hearing of a class action suit brought by investors.
The class action lawsuit was brought by disgruntled investors who accused Goldman Sachs of not releasing pertinent information on packages of mortgage derivates that were high risk. The mortgage derivative packages were at the heart of the 2008 financial crisis that saw the collapse of Lehman Bros and the advent of a recession that is still ongoing.
The Supreme Court let it be known of its intention without issuing a statement or explanation.
The investment group at Goldman Sachs has already lamented that the decision by SCOTUS will cost 'wall street' billions of dollars as the investors will be awarded a percentage of their losses in recompensation.
However, the Court's decision not to hear the case, is already heralded by the financial sector as a green light for pernicious and frivolous litigation from investors, which can undermine wall street to the tune of billions of dollars. Others, who support the class action, are stating that the financial giant is just crying over what could be a much smaller penalty that they are projecting.
The class action suit was brought initially by a pension fund that benefited an electrical worker union's members in Decatur, Illinois, the NECA-IBEW. The pension fund bought certificates from two of the trusts under a 2007 registration agreement and could sue on all 17 offerings. The 2nd Circuit court however, let the union sue on only 7 of the offerings , two it invested in directly and five that contained loans from GreenPoint Mortgage Funding, a part of Capital One who bought them out, and Wells Fargo & Co.
Source: Bloomberg 3.18.13
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