Goldman Sachs & Co. just can’t shake a class action alleging that it duped investors in a $780 million mortgage-backed security. Having dismissed the case without prejudice twice before, U.S. District Judge Miriam Cedarbaum in Manhattan ruled on Thursday that a shifting legal landscape has left her no choice but to let the investor-plaintiffs proceed to discovery.
Cedarbaum concluded that investors in the security, known as GSR Mortgage Loan Trust 2007-4F, adequately alleged that Goldman caused them an economic loss, a necessary element of their claims under Section 12 and Section 15 of the Securities Act of 1933. Cedarbaum had previously come out the other way on the issue, but she reversed course because of a September 2012 decision from the U.S. Court of Appeals for the Second Circuit in a similar case against Goldman. “That opinion has significantly changed the landscape of the pleading standards for loss causation,” Cedarbaum wrote.
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