Faced with claims that Goldman Sachs & Co. saddled a federal credit union with toxic securities, Goldman’s lawyers at Sullivan & Cromwell unearthed a long forgotten arbitration agreement that they hoped would offer a quick escape. But on Tuesday a judge determined that Goldman can’t rely on the 22-year-old document to dismiss the case.
Southern District Judge Denise Cote in Manhattan ruled that the National Credit Union Administration can proceed with a lawsuit alleging that Goldman duped the now-defunct credit union Southwest Corporate Federal Credit Union into purchasing mortgage-backed securities. Goldman’s defense lawyers at S&C argued that the bank could avail itself of an arbitration clause in a two-decade-old agreement with Southwest. Cote disagreed, finding that the NCUA repudiated the agreement.
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