GS Mortgage Securities Corporation : GSAMP Trust 2006-S2, Series 2006-S2; GSAA Home Equity Trust 2006-3, Series 2006-3; and GSAA Home Equity Trust 2006-2, Series 2006-2 Summary: According to a press release dated February 06, 2009, the complaint alleges that on August 17, 2005, defendants caused a Registration Statement to be filed with the SEC in connection with and for the purpose of issuing billions of dollars of Certificates. The Certificates were issued pursuant to the Prospectus Supplements, each of which was incorporated into the Registration Statement. The Certificates were supported by pools of mortgage loans.
According to the complaint, the Offering Documents included false statements and/or omissions about: (i) the underwriting standards used by the loan originators; (ii) the standards and guidelines used by GS Mortgage when evaluating and acquiring the loans; (iii) the appraisal standards used to value the properties collateralizing the loans, and the corresponding loan-to-value ratios of the loans; (iv) the credit enhancement supporting the loan securitization process; and (v) the pre-established ratings assigned to each tranche of Certificates issued pursuant to the offering documents.
Ultimately, the truth about the performance of the mortgage loans that secured the Certificates began to be revealed to the public, increasing the risk of the Certificates receiving less cash flow in the future and the likelihood that investors would not receive it on a timely basis. The credit rating agencies also began to put negative watch labels on the Certificates, ultimately downgrading many. As a result, the Certificates are no longer marketable at prices near the price paid for them, and the holders of the Certificates are exposed to much more risk with respect to both the timing and absolute cash flow to be received than the Offering Documents represented.
On May 06, 2009, an order was granted by the court appointing lead counsel and lead plaintiff.
On September 18, 2009, a Second Amended Complaint was filed with the court on behalf of the plaintiffs.
On January 12, 2011, the Court issued an Opinion and Order dismissing the Plaintiff’s causes of action against the Ratings Agency Defendants. Plaintiff’s claims against the main Defendant with regard to the offerings they did not purchase are dismissed for lack of standing. Plaintiffs’ claims related to the disregard of underwriting guidelines were allowed to proceed, as were the control persons’ liability claims against GSMC, CS Croup and the Individual Defendants.
On June 27, 2012, the Defendants filed a Notice of Interlocutory Appeal.
On August 13, 2012, the Court issued an Order granting the Motion for Settlement.
On November 8, 2012, the Court issued an Order Awarding Attorneys' Fees and Expenses. In addition, the Court also issued an Order Approving Plan of Allocation of Net Settlement Fund. Finally, the Court entered the Order and Final Judgment.
On December 20, 2012, the United States Court of Appeals for the Second Circuit issued a Mandate ordering the stipulation of the parties to withdraw the June 27 Appeal.
On January 4, 2013, the the United States Court of Appeals for the Second Circuit granted the petition of defendants for leave to appeal the District Court's order granting plaintiff's motion for class certification.
SIC Code: 6189
Industry: Investment Services
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