Bloomberg News

Goldman Sachs Wins Dismissal of Some Claims in CIFG Suit

May 03, 2012

Goldman Sachs Group Inc. (GS:US) won dismissal of some claims in a lawsuit brought by CIFG Assurance North America Inc. over $275 million in residential mortgage-backed securities.

The insurer sued Goldman Sachs in New York State Supreme Court in Manhattan in August, accusing the investment bank of making misrepresentations in connection with the securitization of a portfolio of 6,204 mortgage loans.

Goldman Sachs asked the court in October to dismiss six of the eight claims in the suit, arguing that CIFG was informed of the risks associated with the investments, failed to conduct due diligence on its own, and hasn’t sought contractual remedies that would allow it to seek the repurchase of certain loans.

New York State Supreme Justice O. Peter Sherwood, in an order filed today, granted Goldman Sachs’s motion to dismiss three counts, including one for fraudulent inducement, while denying the New York-based investment bank’s motion to dismiss three other claims for breach of contract.

“CIFG rightly contends that it provided enough support for the claimed breaches by providing a statistical sampling with documentation demonstrating the pervasive nature of the collective breaches in the underlying loans,” Sherwood said in the order. “The complaint need not make specific representations as to each of the individual loans.”

Sherwood also granted a motion by Buffalo-based M&T Bank Corp. (MTB:US) to remove it as a defendant in the suit.

Considering Options

“Obviously, we’re disappointed that the court dismissed the fraud charge, but we’ll consider our options going forward,” David Berger, a lawyer for CIFG, said in a phone interview. The insurer’s lawyers were still reviewing the ruling and hadn’t decided whether to appeal, he said.

Michael DuVally, a spokesman for Goldman Sachs, declined to comment on the ruling in an e-mail.

The case is CIFG Assurance North America Inc. v. Goldman, Sachs & Co., 652286/2011, New York Supreme Court, New York County (Manhattan).

To contact the reporter on this story: Chris Dolmetsch in New York at cdolmetsch@bloomberg.net

To contact the editor responsible for this story: Michael Hytha at mhytha@bloomberg.net


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Companies Mentioned

  • GS
    (Goldman Sachs Group Inc/The)
    • $157.69 USD
    • 0.47
    • 0.3%
  • MTB
    (M&T Bank Corp)
    • $121.6 USD
    • -0.04
    • -0.03%
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