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 Pension funds led by NECA-IBEW Health & Welfare Fund of Illinois
accused the bank of misleading investors about the risks associated
with mortgage securities offerings.
NECA-IBEW, an electrical workers' pension fund, owned some
mortgage-backed certificates underwritten by Goldman.
Goldman and its rivals have faced many lawsuits by investors seeking
to recoup losses on mortgage securities.
The investors typically have claimed they were misled about the
risks relating to the underlying home loans, most of which were made
before or as the U.S. housing slump took hold in 2007.
A spokesman for Goldman Sachs declined to comment and attorneys for
the fund did not immediately return calls for comment.
Also on Friday, Goldman Sachs was among a group of banks that
received court approval for a $235 million settlement related to
mortgage securities reached in February, according to a court
filing.
Citigroup Inc, Goldman Sachs and UBS AG agreed to pay $235 million
to settle U.S. litigation accusing them of concealing the risks of
mortgage securities sold by the former Residential Capital LLC
before the global financial crisis.
Led by the New Jersey Carpenters Health Fund, the investors accused
the banks of misleading them in registration statements and
prospectuses about the quality of mortgage loans backing the
securities they helped underwrite in 2006 and 2007.
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The bank is still awaiting potential settlements with government
authorities.
On July 16, Goldman disclosed it set aside $1.45 billion for
mortgage-related legal costs and regulatory matters.
Goldman is among banks targeted by a federal-state working group to
go after misconduct in the pooling and sale of mortgage securities
in the run-up to the financial crisis.
Goldman and Morgan Stanley are next in line for potential
settlements, a person familiar with the matter said at the time.
Bloomberg first reported the news about the $270 million settlement
on Friday.
The pension fund case is NECA-IBEW Health & Welfare Fund v. Goldman
Sachs & Co., 08-cv-10783, U.S. District Court, Southern District of
New York (Manhattan).
(Additional reporting by Sudarshan Varadhan in Bengaluru; Editing by
Leslie Adler)
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