GLOBAL - The €246bn civil service scheme ABP has sued Goldman Sachs Group over the sale of mortgage-backed securities.
ABP, one of the largest pension schemes in the world, claims the collateralised debt obligations (CDOs) Goldman Sachs sold it were riskier than the investment bank had suggested.
According to the complaint filed in the New York State Supreme Court, presented by law firm Grant & Eisenhofer, “Goldman [Sachs] knew the loans it acquired from the third-party originators and packaged and sold to ABP were destined to fail”.
A spokesman at ABP, who declined to provide details on the pension fund’s claimed loss, added: “Goldman Sachs knew the quality of the underlying mortgages from the start to the end and must have been aware they did not deserve a AAA rating.”
ABP filed a similar suit against JP Morgan at the end of last year.
The scheme’s spokesman said: “JP Morgan had made us believe the moon was made of green cheese, as the investments in CDOs were much riskier than the bank suggested.
“In our opinion, JP Morgan was fully aware of the risks, as it was involved in every step of the mortgage-lending process. We think the bank also wrong-footed the rating agencies, which rated the investments as safe AAA.”
At year-end, ABP also filed a lawsuit against banking giant Credit Suisse, claiming it had sold the scheme residential mortgage-backed securities without disclosing the toxic nature of the mortgages serving as a collateral.
And in September, ABP filed a complaint against Deutsche Bank for fraud relating to “misleading statements” made regarding similar securities.
The civil service scheme has also filed a lawsuit against GMAC, the financial branch of General Motors, for miss-selling securities.