Goldman Sachs Group Inc. and TCW Group Inc. were sued by Landesbank Baden-Wuerttemberg over $37 million in losses from an investment in a collateralized debt obligation named Davis Square Funding VI.
The CDO, for which Goldman was the placement agent and TCW the investment adviser, held 95 percent residential mortgage- backed securities, of which 33 percent were subprime and 46 percent were “midprime,” the German bank said in a complaint filed today in federal court in Manhattan.
When Goldman sold the investments to a Luxembourg affiliate of LBBW in March 2006, they were represented as “safe, secure, and nearly risk free,” according to the complaint. At the same time, Goldman senior executives privately observed “it was game over” for subprime lenders and were reducing their exposure to the mortgages, LBBW said.
“Goldman knew at the highest levels of its organization that its representations to LBBW Luxemburg that the notes merited triple-A ratings and were high grade were blatantly false,” the Stuttgart-based bank said. “Goldman committed fraud and, or, was negligent in marketing and selling the notes to LBBW Luxemburg.”
http://www.bloomberg.com/news/2010-10-04/goldman-sachs-tcw-sued-by-landesbank-over-37-million-in-losses-from-cdo.html They are soo cute, till they start eating their own offspring
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