Credit Unions Sue Goldman Sachs for Misrepresenting Mortgage-Backed Securities


The National Credit Union Administration (“NCUA”), acting as liquidating agent for failed corporate credit unions, has filed suit in a federal court in Los Angeles against Goldman Sachs. The complaint involves the sale of $1.2 billion of mortgage-backed securities that were “destined to perform poorly.”

The credit unions that purchased the mortgage-backed securities from Goldman Sachs – Western Corporate Federal Credit Union, also known as WesCorp, and U.S. Central Federal Credit Union – became insolvent following dramatic declines in value in those securities.

NCUA alleges that Goldman Sachs, acting as sellers and underwriters, made numerous material misrepresentations in the offering documents, which misled the credit unions into believing the risk of loss associated with the mortgage-backed securities was minimal, when in fact the risk was substantial. NCUA seeks damages in excess of $491 million from Goldman Sachs.

NCUA has filed three other actions against major Wall Street firms. The total sought in the four lawsuits filed to date is nearly $2 billion. The suits follow lengthy investigations into the circumstances surrounding the purchases of these securities.

“NCUA continues to carry out our responsibility to do everything reasonable in our power to seek maximum recoveries,” NCUA Board Chairman Debbie Matz was quoted as saying, adding: “By these actions we intend to hold responsible parties accountable. Those who caused the problems in the wholesale credit unions should pay for the losses now being paid by retail credit unions.”

Page Perry is an Atlanta-based law firm with over 125 years collective experience representing investors in securities-related litigation and arbitration. While past results are not indicative of future success, Page Perry’s attorneys have recovered over $1,000,000 for clients on more than 45 occasions. Page Perry’s attorneys have extensive experience in representing investors in cases involving mortgage-backed securities. For further information, please contact us.