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Credit union group sues Goldman

Bloomberg News / August 10, 2011

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WASHINGTON - Goldman Sachs Group was sued by the National Credit Union Administration, which accused the Wall Street firm of violating federal and state laws in the sale of securities to now-failed corporate credit unions.

NCUA is seeking damages in excess of $491 million from Goldman in the lawsuit filed yesterday in California, according to a statement. The suit is the fourth in a series aimed at recovering almost $2 billion from “sellers and underwriters of questionable securities,’’ NCUA said in the statement.

“NCUA continues to carry out our responsibility to do everything reasonable in our power to seek maximum recoveries,’’ NCUA chairwoman Debbie Matz said in the statement. “Those who caused the problems in the wholesale credit unions should pay for the losses now being paid by retail credit unions.’’

Stephen Cohen, a spokesman for New York-based Goldman, declined to comment on the NCUA lawsuit.

NCUA claims that Goldman misrepresented securities in offering documents, causing the credit unions to believe the risk of loss was minimal when in fact it was substantial, according to its statement. The regulator previously filed a complaint against JPMorgan Chase & Co. and two against Royal Bank of Scotland Group PLC.

The complaint against Goldman relates to the collapses of the US Central and Western Corporate federal credit unions, two of the five liquidated under NCUA conservatorship, the regulator said in the statement.

Goldman shares rose 4.31 percent to $122.73.