NCUA Files Suit Against Goldman Sachs

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ALEXANDRIA, Va. – NCUA on Tuesday filed suit in California against New York firm Goldman Sachs & Co., alleging violations of federal and state securities laws, as well as misrepresentations in the sale of securities to now-failed U.S. Central and Western Corporate federal credit unions.

It is the fourth such suit the agency has filed in the wake of losses on investments by the corporate credit unions it has placed into conservatorship.

The suit alleges damages in excess of $491 million from Goldman Sachs, bringing the total sought in the four lawsuits filed to date to nearly $2 billion. NCUA said in a statement that its suit “claims the sellers and underwriters of the questionable securities made numerous material misrepresentations in the offering documents. These misrepresentations caused the corporate credit unions to believe the risk of loss associated with the investment was minimal, when in fact the risk was substantial.”

NCUA earlier filed three similar legal proceedings, two in the Federal District Court of Kansas June 20 against J.P. Morgan Securities, LLC, and RBS Securities, and one in the Federal District Court in Central California also against RBS July 18. The agency indicated that as many as 10 such suits may ultimately be filed.

 

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