Blog Post

Goldman involved in CDO Law Suit

Posted by: Robert Rex
October 12, 2010
Topic: Goldman Sachs

"NEW YORK (TheStreet) -- Goldman Sachs is being sued by Landesbank Baden-Wuerttemberg over losses the German bank incurred investing in a collateralized debt obligation (CDO) called Davis Square Funding VI, Bloomberg News reported, citing court documents Goldman, which was the placement agent on the transaction, represented the investments as "safe, secure, and nearly risk free," according to the complaint cited by Bloomberg. Landesbank Baden-Wuerttemberg, which lost $37 million on the investment, is also suing TCW Group, which was the investment adviser on the CDO, the article states."

These CDOs, like so many other investments conceived when the market was skyrocketing, were sold as "safe, secure, and nearly risk free". Of course, as we later found out, these exotic derivatives were anything but safe and played a significant role in the near-collapse of the financial system in 2008. It's good to see that at least some action is being taken, because these investment advisers should be held accountable for their mistakes.

Article from TheStreet: http://www.thestreet.com/story/10880505/1/goldman-hit-by-cdo-lawsuit.html