A US federal court has green singled shareholders' move to put Goldman Sachs Group in the dock, over allegations of holding back conflicts of interest in several collateralized debt obligation transactions.
The case filed in Manhattan federal court accuses the US wealth manager for its failure in disclosing that it was betting against its clients by taking short positions in four CDO transactions it sold to investors, according to Reuters.
The US District Judge Paul Crotty issued a decree that investors could proceed with claims against the firm’s actions as well as the role of hedge fund Paulson & Co in selecting risky subprime mortgages for the Abacus CDO.
Crotty said that the suits revealed Goldman’s material misstatements and pattern of making misstatements and its conflict of interest in several collateralized debt obligation transactions.
The case is In re Goldman Sachs Group Inc Securities Litigation, in the US District Court for the Southern District of New York.