Prudential Fraud Claims Against Goldman Sachs Over Securities Dismissed

By David Voreacos | January 7, 2014

Prudential Financial Inc. agreed to dismiss its claims that Goldman Sachs Group Inc. engaged in fraud and racketeering in selling $375 million of residential mortgage-backed securities, a court order shows.

U.S. District Judge Susan Wigenton signed a dismissal order yesterday in Newark, New Jersey. In April, she denied Goldman’s bid to dismiss the case, ruling that Prudential, the second- largest U.S. life insurer, sufficiently pleaded claims that Goldman misrepresented its underwriting standards and practices.

Prudential, based in Newark, bought securities from Goldman in 16 deals from February 2004 to December 2008, according to Wigenton’s opinion.

Before her April ruling, Goldman asked the judge to dismiss the complaint, arguing that Prudential didn’t adequately state its case for fraud and racketeering. Wigenton disagreed, ruling that Prudential “adequately pled a cause of action for fraud” and sufficiently stated its case that Goldman Sachs violated New Jersey’s civil anti-racketeering statute.

Goldman Sachs also argued that New York law, not New Jersey law, applies to the fraud and claims under the Racketeer Influenced and Corrupt Organizations Act. Wigenton ruled that “determining a choice of law at this stage is premature” regarding fraud claims. She made a similar ruling with regard to the Goldman Sachs motion on the racketeering claim.

A spokesman for New York-based Goldman, Michael DuVally, declined to comment on the dismissal. A Prudential spokesman, Bob DeFillippo, didn’t immediately return a call seeking comment.

The case is Prudential Insurance Co. v. Goldman Sachs & Company, 12-cv-06590, U.S. District Court, District of New Jersey (Newark).

 

 

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