Goldman Sachs Sued by Liberty on Fannie Mae Offering

Discussion in 'Wall St. News' started by ASusilovic, Jul 9, 2010.

  1. July 9 (Bloomberg) -- Goldman Sachs Group Inc. was accused in a lawsuit by Liberty Mutual Insurance Co. of misleading investors in 2007 when it sold Fannie Mae preferred shares while betting against the U.S. mortgage market.

    Goldman Sachs misrepresented Fannie Mae’s health when it underwrote the offerings, in which the insurer invested $62.5 million, according to a complaint filed yesterday in federal court in Boston. The investment bank misstated the purpose of the sale by saying the offering was to raise surplus capital when it was actually needed to help Fannie Mae sustain its business, said Liberty Mutual, which accused Goldman Sachs of securities fraud.

    “As a knowledgeable and sophisticated investor in the U.S. real estate financial markets, and with access to Fannie Mae’s financial records, Goldman Sachs knew or recklessly disregarded the actual status of Fannie Mae’s capital structure,” Liberty Mutual said in the complaint. The mortgage guarantor was seized by the U.S. in 2008.

    Recklessly ? :cool:
  2. Even people that hate GS have to admit this suit is retarded. People that make bad investment decisions need to be held accountable instead of crying for a mulligan.

    I had no idea GS held a gun to find-managers' heads and made them purchase things.
  3. They should be assuming the deal sponsor is a thief and act accordingly. That's what they are paid for, else they would be doing honest work, like selling hot dogs at the beach.
  4. <a href="">Goldman</a> predicting economic slowdown. They are also seeking an extension in the SEC case.