Goldman Sachs Group Inc. must face a shareholder class action accusing the bank of hiding conflicts of interest, including behind-the-scenes dealings with a prominent hedge fund manager, when creating risky subprime securities before the 2008 financial crisis.
In a 2-1 decision last Tuesday, the 2nd U.S. Circuit Court of Appeals in Manhattan said Goldman failed to overcome a legal presumption that shareholders relied on its pledges to guard against conflicts, when deciding to buy the bank’s stock.
