Goldman Sachs (GS) endured a setback Monday when the U.S. Supreme Court refused to hear the company's appeal of a lower-court decision involving securities backed by residential mortgages.

The investment bank asked the court in October to overturn a ruling in September by the U.S. Court of Appeals for the 2nd Circuit that permits the NECA-IBEW Health & Welfare Fund, a pension fund for electrical workers, to sue Goldman for allegedly misleading investors about mortgage-backed securities the fund itself did not own.

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