The New York State Supreme Court has denied Goldman Sachs Group Inc.’s motion to dismiss fraud claims related to the bank’s infamous Abacus deal.
Last year, the bond insurance company ACA Financial Guaranty Corp. sued Goldman, accusing Goldman of financially persuading it in 2007 to provide insurance for Abacus 2007-ACI, a synthetic collateralized debt obligation (CDO). The CDO prompted the Securities and Exchange Commission (SEC) to scrutinize Goldman’s business practices. Soon after, the SEC brought two civil charges against Goldman for misleading customers about the offering, and the bank settled with the agency for $550 million in 2010.
Yesterday, Justice Barbara Kapnick denied Goldman’s motion seeking to dismiss ACA’s claims of fraudulent inducement and fraudulent concealment. She did, however, dismiss ACA’s claim of unjust enrichment.
Goldman has 30 days to answer ACA’s fraud claims.
Read Reuters and the Wall Street Journal for more information.
