Goldman Sachs, BofA Securities Class Action Settles for $18.5M

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Goldman Sachs, BofA Securities Class Action Settles for $18.5M

By Michael Carlin

A nine-year-old securities lawsuit against Goldman Sachs Group, Inc., Bank of America, and several other large securities firms is on the path to final settlement. On November 9 these parties reached a settlement agreement that is now pending approval by a federal court.

The securities fraud lawsuit alleged that the defendant trading firms engaged in self-dealing and illegal proprietary trading as specialist firms for the NYSE, which used the firms to funnel trades. The plaintiffs say that the firms traded ahead of orders to buy and sell stock and that the NYSE failed or neglected its duties to regulate the firms.

The NYSE was originally a defendant to this case but settled separately in 2010. As a part of the settlement agreement the NYSE agreed to cooperate with the plaintiffs in continuing the lawsuit against the remaining defendants.

The lead plaintiffs in the lawsuit, the California Public Employees’ Retirement System (“CalPERS”), moved to create a class action in 2009.

Some of the proposed settlement has already been paid for; $750,000 of the $ 18.5 million settlement was provided by Dutch equity defendant Van der Moolen Holdings, N.V. The proposed settlement also allows investors to reap additional compensation from Van der Moolen’s bankruptcy estate.

The defendants denied wrongdoing and liability in the settlement agreement.

The self-dealing alleged by the plaintiffs in this securities fraud case was also the cause for an earlier investigation by the Securities and Exchange Commission. That case settled for $240 million in 2004.

After settling with the SEC case the defendants moved to dismiss the investors’ civil complaint. The U.S. District Court Judge for the Southern District of New York, Robert Sweet, did not dismiss all the lawsuits at that time. However, the judge did dismiss the state law claims against the defendants who settled with the SEC, as well as several other claims against individual defendants for accusations of manipulative schemes under section 10(b) of the Securities Exchange Act of 1934.  Judge Sweet also restricted the plaintiffs’ ability to recover funds related to trades that were a part of the SEC settlement.

The law firm Robbins Geller Rudman & Dowd LLP is Lead Counsel for the plaintiffs. The plaintiffs collectively submitted a motion to have the court approve the settlement. The court must review the settlement to ensure its adequacy in terms of several factors as articulated by the Grinnell standard for approving class action settlements. The settlement hearing is scheduled for March 13, 2013.

Securities firms owe a duty to comply with federal securities law. When they violate their duties they must compensate those who are harmed by their actions in line with securities law.

If you were the victim of manipulative or deceptive practices you may be entitled to compensation from a securities lawsuit settlement. To learn more about protecting your legal rights visit the Securities Fraud, Stock Fraud Investment Class Action Lawsuit Investigation.

Updated December 17th, 2012

All securities fraud class action and lawsuit news updates are listed in the Stocks & Securities section of Top Class Actions