Groundbreaking $272 Million Settlement Approved in Goldman Sachs RMBS Action

On May 2, 2016, the Honorable Loretta A. Preska of the Southern District of New York issued an order granting final approval of a $272 million recovery in a case that challenged Goldman Sachs’s mortgage securitization practices. After over seven years of hard-fought litigation, the settlement concludes one of the last remaining mortgage-backed securities (MBS) purchaser class actions arising out of the global financial crisis. The settlement resolves claims that Goldman Sachs used registration statements to sell MBS certificates that incorporated false and misleading statements about the quality of the certificates issued by various securitization trusts in violation of the federal securities laws.

This notable result demonstrates the Firm’s deep bench and commitment to diligently pursuing viable claims on behalf of the class. Earlier in the case when the claims were dismissed, the Firm's Appellate Practice Group helped secure a precedential decision from the Second Circuit Court of Appeals clarifying the scope of permissible class action claims brought pursuant to the Securities Act of 1933. Specifically, in a case of first impression, the Second Circuit rejected the concept of “tranche” standing and found that a lead plaintiff has class standing to pursue claims on behalf of purchasers of securities that were backed by pools of mortgages originated by the same lenders who had originated mortgages backing the lead plaintiff’s securities. The landmark appellate decision favorably altered the landscape of MBS-related litigation brought by institutional investors.

Robbins Geller attorneys responsible for this achievement included Darren J. Robbins, Arthur C. Leahy, Joseph D. Daley, Lucas F. Olts, Nathan R. Lindell, Sara B. Polychron and Michael Albert, as well as a team of other highly skilled and dedicated attorneys and support staff.

NECA-IBEW Health & Welfare Fund v. Goldman Sachs & Co., No. 1:08-cv-10783 (S.D.N.Y.).