Goldman Sachs suffered a defeat at the hands of the nation’s highest court.
The Supreme Court yesterday refused to hear the bank’s appeal of a federal court ruling in a lawsuit alleging it misled investors about dicey mortgage-backed securities.
Goldman argued that the lead plaintiff, NECA-IBEW Health and Welfare Fund, didn’t have legal standing to file a class action on behalf of clients in securities it doesn’t own. Last year, the Second Circuit Court of Appeals disagreed, and the Supreme Court upheld that decision.
The suit relates to 17 complex mortgage-backed securities offerings created by Goldman mortgage unit between 2007 and 2008. NECA’s claims that GS Mortgage misled investors by not disclosing that the mortgages were improperly originated.
A Goldman spokesman declined to comment.
Goldman now stands to write a bigger check if it loses the class action. The bank already paid a $550 million fine three years ago to the Securities and Exchange Commission to settle similar charges.
The legal loss follows another setback for Goldman. The SEC last week declined to dismiss a shareholder proposal to strip CEO Lloyd Blankfein of his chairmanship role.
Goldman shares fell $2.97, or 1.87 percent, to $151.95.