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Case Status:    DISMISSED    
On or around 10/02/2008 (Stipulation and order of dismissal (voluntary dismissal))

Filing Date: April 16, 2008

According to a press release dated April 18, 2008, on April 18, The New York Times reported that New York Attorney General Andrew M. Cuomo is investigating how auction rate securities were marketed to municipalities and public entities, and his office has subpoenaed 18 banks that underwrote and brokered auction rate securities, including Goldman Sachs Group, Inc. In addition, securities regulators from nine other states have formed a task force investigating how banks disclosed the risks of auction failures to investors, and the Financial Industry Regulatory Authority, working with the Securities and Exchange Commission, has initiated an inquiry into sales practices in the auction rate securities industry.

The Complaint charges Goldman Sachs with violations of federal securities laws. Among other things, plaintiff claims that defendants' material omissions and dissemination of materially false and misleading statements concerning auction rate securities caused those securities to be overvalued and artificially inflated, inflicting damages on investors. Goldman Sachs provides investment banking, securities, and investment management services to corporations, financial institutions, governments and high-net-worth individuals worldwide. The Complaint alleges that defendants represented to investors that auction rate securities (also known as auction rate preferred stock, variable rate preferred securities, money market preferred securities, periodic auction rate securities and auction rate bonds) were equivalent to cash or money market funds, and highly liquid investments suitable for short-term investing. Defendants knew, but failed to disclose to investors, material facts about auction rate securities. Specifically, the Complaint alleges that defendants failed to disclose: (i) that auction rate securities were not cash alternatives, but actually were complex, long-term financial instruments with 30-year maturity dates or no maturity at all; (ii) that auction rate securities were only liquid at the time of sale because the auction market was artificially supported and manipulated by various broker-dealers to maintain the appearance of liquidity and stability; and (iii) that auction rate securities would become illiquid as soon as the broker-dealers stopped maintaining the auction market.

On February 13, 2008, approximately 87% of all auctions of auction rate securities failed when all major broker-dealers refused to continue to support the auctions. As a result of the withdrawal of support by all of the major broker-dealers, the market for auction rate securities collapsed, leaving the holders of these auction rate securities with no commercially reasonable means of liquidating the investments defendants offered and sold as a suitable alternative to money market funds and other short-term cash management vehicles.

On April 9, 2008, in a 10-Q filing with the SEC, Goldman Sachs acknowledged it has received requests for information from "various governmental agencies and self-regulatory organizations relating to certain auction products...and the related recent failure of such auctions." The New York Attorney General also is investigating how banks brokered auction rate securities and how they decided to allow some auctions to fail in February while supporting others.

On October 2, 2008, a Stipulation and Order of Voluntary Dismissal was filed. According to the Order, it is hereby stipulated and agreed by and between the parties and/or their respective counsel(s) that the above-captioned action is voluntarily dismissed, against the defendant(s) The Goldman Sachs Group, Inc., Goldman, Sachs & Co., pursuant to Rule 41(a)(1)(A)(ii) of the Federal Rules of Civil Procedure.

On October 10, 2008, the motion to transfer the action to the Multidistrict Litigation in the Southern District of New York was denied.


Sector: Financial
Industry: Investment Services
Headquarters: United States


Ticker Symbol: GS
Company Market: New York SE
Market Status: Public (Listed)

About the Company & Securities Data

"Company" information provides the industry and sector classification and headquarters state for the primary company-defendant in the litigation. In general, "Securities" information provides the ticker symbol, market, and market status for the underlying securities at issue in the litigation.

In most cases, the primary company-defendant actually issued the securities that are the subject of the litigation, and the securities information and company information relate to the same entity. In a small subset of cases, however, the primary company-defendant is not the issuer (for example, cases against third party brokers/dealers), and the securities information and company information do not relate to the same entity.
COURT: S.D. New York
DOCKET #: 08-CV-3659
JUDGE: Hon. John E. Sprizzo
DATE FILED: 04/16/2008
CLASS PERIOD END: 02/13/2008
  1. Glancy Binkow & Goldberg LLP (Los Angeles)
  2. Toptani Law Offices
No Document Title Filing Date
—Reference Complaint Complaint Related Data is not available
—Related District Court Filings Data is not available