Insurer ACA's suit against Goldman dismissed
NEW YORK (AP) — A New York state appeals court dismissed a lawsuit brought by insurer ACA Financial Guaranty Corp. against Goldman Sachs over an investment that went bad.
In a 3-2 ruling issued Tuesday, the appellate division judges granted Goldman's motion to dismiss the case, reversing a lower court decision.
ACA sued Goldman in January 2011, seeking $30 million in compensatory and $90 million in punitive damages in connection with a portfolio of securities called Abacus.
The insurer claimed that Goldman sold the portfolio even though hedge fund client Paulson & Co. designed the portfolio to fail, generating fees for Goldman.
Goldman and Paulson made money from the investment, while investors lost more than $1 billion.
Goldman paid the Securities and Exchange Commission $550 million to settle charges related to Abacus.
A Goldman spokesman said the company is pleased with the court's decision.
ACA Financial attorney Marc Kasowitz said the majority's decision was wrong on the law and wrong on the facts, noting the dissenting opinion by one of the judges argued strongly that the lower court's ruling should have been affirmed.
"We have an appeal as of right now to the Court of Appeals of the State of New York and will be pursuing that appeal promptly," Kasowitz said.
Shares in Goldman Sachs Group Inc. ended regular trading up $4.89, or 3.3 percent, at $154.52. The stock lost 72 cents to $153.80 in after-hours trading.