Los Angeles, A: A $235 million preliminary settlement has been reached in a mortgage backed securities class action lawsuit brought against Citigroup Global Markets Inc., Goldman Sachs & Co. and UBS Securities LLC. The suit was brought in 2008 by pension fund New Jersey Carpenters Health Fund in New York and alleged they were sold securities that contained the toxic MBS without disclosure of the securities weaknesses.
According to the suit, the fund and other investors were sold a number of offerings from 2006 to 2007 that were issued and sold by Residential Accredit Loans Inc., Ally Securities LLC and other affiliates. Plaintiffs alleged the prospectuses issued in connection with the securities contained material misstatements and omissions. The investors alleged that RALI certificates' seller, Residential Capital, and the underwriter defendants were liable for failing to disclose weaknesses in the underlying loans in some 59 offerings.
According to the proposed settlement terms, the fund will be distributed to three tiers of putative class members, each based on the strength of their claims at the time of settlement.
The case is New Jersey Carpenters Health Fund et al. v. Residential Capital LLC et al., case number 1:08-cv-08781, in the U.S. District Court for the Southern District of New York.