Allstate Sues Goldman Sachs Over Alleged ‘Junk’ Mortgage Securities

According to the complaint, people at Goldman called the mortgage-backed securities “junk,” “dogs,” “crap” and “lemons.” According to the complaint, people at Goldman called the mortgage-backed securities “junk,” “dogs,” “crap” and “lemons.”

NU Online News Service, Aug. 16, 11:02 a.m. EST

Allstate Insurance Co. has filed another lawsuit in New York State Supreme Court seeking to recover investment losses on residential mortgage-backed securities.

A lawsuit filed Aug. 15 names Goldman Sachs Group Inc. and alleges that the more than $123 million in securities it bought from Goldman from April 2006 to March 2007 were sold fraudulently.

In fact, according to the complaint, people at Goldman called the mortgage-backed securities “junk,” “dogs,” “crap” and “lemons.” The characterizations were recently made public in governmental investigations, Allstate says.

The U.S. Senate Permanent Subcommittee on Investigation says in an April 2011 report that Goldman was “keenly aware of the poor quality of many of the loan pools” and that the bank knew they were “likely to incur abnormally high rates of default,” Allstate says in the complaint.

The Northbrook, Ill. insurer has filed numerous similar lawsuits against other banks in an effort to get back billions of dollars in investments in mortgage-backed securities. Most recently Allstate filed a suit to try and get back $104 million in mortgage-backed securities it purchased from Morgan Stanley and its affiliates.

A suit against J.P. Morgan Chase & Co. is over more than $750 million in mortgage-backed securities purchased. The insurer has another lawsuit against Bank of America’s Countrywide Financial Corp. seeking damages related to its purchases of more than $700 million in mortgage-backed securities from the company

In each of the lawsuits Allstate seeks damages including rescission, monetary losses, attorneys’ fees, other costs and interest.

Comments

Resource Center

View All »

Contractors General Liability Coverage 102

What is a prior work exclusion? Which option is right for my client? Why do...

Sign up today to get a 50% matching credit -...

Insurance marketing sometimes seems like it's a game of swings and misses, but we're here...

Guide: 5 Steps to Selling Cyber

Cyber risk and data security is on the agenda of every business owner and executive....

Citation Correlation

Do rigger and signalperson qualifications correlate with the cause of crane and rigging accidents? ...

Complete Guide to Electronic Signatures in Property & Casualty Insurance...

In property and casualty insurance, closing new business quickly is key. Learn how to leverage...

INSTANT ACCESS: Complimentary Sales Closer Questionnaires

Help property owners or managers compare your commercial residential property insurance coverage vs. the competition....

Determining Vacant Property Perils and Valuations

Are your clients fully covered for Vacant Properties? In this economic climate, your insureds may...

Risk Management for Law Firms

This package of 3 concise risk management articles offers straightforward content and practical suggestions law...

Guide: Top 15 E&O Risks-And How To Avoid Them

Accidents happen. But when it's an errors and omissions oversight, that accident can open your...

We'll Show You How to Reach Your Sales Goals

Whether you work alone or have a team of agents working for you, we can...

PropertyCasualty360 Daily eNews

Get P&C insurance news to stay ahead of the competition in one concise format - FREE. Sign Up Now!

Advertisement. Closing in 15 seconds.