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Judge Greenlights Suit Over Goldman's Double-Dealing

Posted: March 21, 2012
By: Richard Vanderford
Source: Law360
Practice Areas: Securities Litigation

An investor class action claiming Goldman Sachs Group Inc. bet against its own products can go forward, a federal judge ruled Wednesday in an opinion critical of the giant's allegedly "cynical" conduct in the run-up to the financial crisis.

U.S. District Judge Victor Marrero ruled that hedge fund Dodona I LLC can pursue almost all of its claims related to $1.2 billion worth of Goldman-created collateralized debt obligations that became junk as their underlying assets collapsed.

The decision repudiates Goldman's theory that it was legal to structure products so that it wins when buyers lose as long as it is dealing with sophisticated investors.

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