Business | Investment
Investor sues Goldman, JPMorgan
Goldman Sachs Group Inc and JPMorgan Chase & Co were among underwriters accused in a lawsuit of misleading investors in a $6 billion (Dh22 billion) offering of Freddie Mac stock in November.
- Bloomberg
- Published: 23:35 September 25, 2008
Brooklyn: Goldman Sachs Group Inc and JPMorgan Chase & Co were among underwriters accused in a lawsuit of misleading investors in a $6 billion (Dh22 billion) offering of Freddie Mac stock in November.
The suit, filed on Thursday in Manhattan federal court by investor Robert Mark, also names Citigroup Inc's Citigroup Global Markets. Mark seeks class action or group status and asks for unspecified damages.
Investors claim the "offering circular and other offering materials for the $6 billion preferred stock offering failed to warn investors about Freddie Mac's fatal exposure to mortgage - related losses, poor underwriting standards and risk management procedures,'' their lawyers said in a statement.
The US government seized control of Fannie Mae and Freddie Mac on September 7, after the biggest surge in mortgage defaults in at least three decades threatened to topple the companies making up almost half the US home-loan market.
Goldman spokesman Michael Duvally and JPMorgan spokesman Brian Marchiony declined to comment. Citigroup spokesman Michael Hanretta didn't have an immediate comment.
The suit is Mark v. Goldman Sachs, 08-cv-8181, US District Court, Southern District of New York (Manhattan). Lehman unit sued by Schroder seeking pepayment of $17 million.
A unit of Lehman Brothers Holdings Inc. was sued by Schroder Alternative Solutions, a Luxembourg-based investment company that seeks the return of more than $17 million it says was posted as collateral in a commodity swap.
Schroder sued Lehman Brothers Commodity Services in New York State Supreme Court in Manhattan yesterday, alleging the firm failed to repay the funds after the transaction was terminated September 10.
In the complaint, Schroder alleges Lehman breached its contract and fraudulently conveyed the funds and Schroder says it has demanded the return of the collateral since September 12. Lehman filed the largest bankruptcy in history on September 15, listing debt of $613 billion and assets of $639 billion.
"To date, LBCS has failed to return any portion of SAS's collateral and accrued interest, and has not provided any explanation for its failure to do so,'' Schroder alleged in the complaint.
Improper transfer
Schroder alleges that $8 billion was improperly transferred out of the failed investment bank's European units before its collapse. The Luxembourg firm seeks the return of the funds as well as damages and legal fees.
By "the transfer of $8 billion from one or more affiliates of LBCS to other Lehman affiliates and the failure of LBCS to return SAS's collateral without explanation, LBCS is engaged in conveying assets without fair consideration,'' Schroder said in the complaint.
Schroder seeks the return of its collateral and accrued interest totaling more than $17.2 million, the firm said in the lawsuit.
The bank won approval from US Bankruptcy Judge James Peck on September 19 for the $1.75 billion sale of its North American businesses to London-based Barclays. Peck overruled objections from New York-based Bay Harbour Management LC and other Lehman creditors who said the sale was moving too quickly.
While Peck's approval was intended to clear the way for Barclays, the UK's third-biggest bank, to quickly complete the transaction, appeals may slow that process. Any creditors who filed an objection to the sale may appeal.
Lehman Brothers Holdings Inc said Sept 22 it will take "considerable time'' before returning assets stranded by the world's largest bankruptcy to hundreds of hedge-fund clients, PricewaterhouseCoopers, Lehman's bankruptcy administrator in London said in a statement.
Schroder's lawyer, Randall Bodner, a partner at Ropes & Gray in Boston, didn't return a voice-mail message left at his office seeking comment about the lawsuit.
The case is Schroder Alternative Solutions v. Lehman Brothers Commodity Services Inc., 602753/2008, New York State Supreme Court (Manhattan). PFF Investor sues to stop sale, revalue under bailout.
PFF Bancorp Inc, the California lender that agreed to be acquired by FBOP Corp, was sued by a shareholder over claims the deal should be reassessed in light of the federal government's $700 billion bailout package.
The plan to remove illiquid assets from the banking system would give value to some of PFF Bancorp's mortgage assets considered worthless in the merger agreement, lawyers for shareholder Alan Kahn said.
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