Lead Plaintiffs In Securities Class Action Lawsuit Against Goldman Sachs Agree To Settlement

NEW YORK - (Mealey's) Lead plaintiffs in a securities class action lawsuit against Goldman Sachs & Co. Inc., certain of its subsidiaries and officers and directors and three ratings agencies have agreed to settle their claims against the defendants, according to a letter sent July 18 to the federal judge in New York overseeing the lawsuit (Public Employees' Retirement System of Mississippi v. Goldman Sachs Group, Inc., et al., No. 09-1110, S.D. N.Y.). 

(Letter available. Document #88-120723-068L.) 

According to the letter, which was written by attorney David L. Wales of the law firm of Bernstein Litowitz Berger & Grossmann, lead counsel in the class action, recently appointed lead plaintiff the Public Employees' Retirement System of Mississippi (MissPERS) and the defendants each have accepted the terms of the settlement, which were proposed by mediator Daniel Weinstein.

 "The parties propose to submit the Stipulation, along with motion papers in support of preliminary approval of the settlement by Monday, July 31, 2012.  The mediator has committed to assist the parties in resolving any remaining issues in negotiating the Stipulation.  While parties normally seek 45 days for preparing the stipulation of settlement and the preliminary approval motion, here we are only seeking 17 days.  The parties have proposed this aggressive date for submitting these settlement papers based on their desire to quickly move forward with the proposed settlement and the parties' familiarity with Your Honor's desire for moving cases along quickly," Wales wrote to U.S. Judge Harold Baer Jr. of the Southern District of New York. 

2nd Amended Complaint 

MissPERS filed a second amended complaint in the District Court on behalf of all purchasers of mortgage pass-through certificates issued pursuant or traceable to GS Mortgage Securities Corp.'s Aug. 15, 2005, registration statement. 

MissPERS alleged that Goldman Sachs Group, offering sponsor Goldman Sachs Mortgage Co., depositor GS Mortgage, Goldman, Sachs & Co. Inc. and GS Mortgage officers and directors Daniel L. Sparks, Mark Weiss and Jonathan S. Sobel (collectively, the GS defendants) and ratings agencies Moody's, The McGraw-Hill Cos. Inc. and Fitch Inc. (collectively, the rating agency defendants) issued false and misleading statements concerning the subprime exposure of the mortgage-backed securities issued in the offering in violation of Sections 11, 12(a)(2) and 15 of the Securities Act of 1933. 

On Jan. 12, 2011, Judge Baer granted in part and denied in part the defendants' motions to dismiss, ruling that MissPERS lacks standing to bring claims against the GS defendants and failed to properly bring its claims against the ratings agency defendants for securities it did not purchase. 

Class Certification 

MissPERS then moved to certify a class of all purchasers of "all persons or entities that purchased or acquired publicly offered certificates of GSAMP Trust 2006-S2 and who were damaged thereby" and to appoint itself as lead plaintiff and the Bernstein Litowitz as lead counsel. 

In granting the motion on Feb. 2, Judge Baer held that MissPERS met all statutory requirements to serve as lead plaintiff and named Bernstein Litowitz as lead counsel. 

MissPERS is represented by David R. Stickney, Timothy A. DeLange, Elizabeth Lin and Matthew P. Jubenville of Bernstein Litowitz in San Diego and Bruce D. Bernstein of Bernstein Litowitz in New York. 

Defendants 

The GS defendants are represented by Richard H. Klapper, Michael T. Tomaino Jr., Patrice A. Rouse and Harsh N. Trivedi of Sullivan & Cromwell in New York. 

Moody's is represented by Joshua M. Rubins and James J. Coster of Satterliee Stephens Burke & Burke.  Fitch is represented by Martin Flumenbaum, Roberta A. Kaplan, Andrew J. Ehrlich and Tobias J. Stern of Paul, Weiss, Rifkind, Wharton & Garrison.  McGraw-Hill is represented by Floyd Abrams, S. Penny Windle, Adam Zurofsky and Tammy L. Roy of Cahill Gordon & Reindel.  All are in New York.

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