Goldman Sachs, JP Morgan Sued Over Alleged MFGlobal Misstatements
Goldman Sachs Group Inc. and JP Morgan Chase & Co. have been sued by two pension funds who claim that the two investment banks made misleading statements about the scope of MFGlobal's exposure to European sovereign debt, Bloomberg News reports.
According to court papers filed in federal court in Manhattan, the two funds, the IBEW Local 90 Pension Fund and the Plumbers & Pipefitters' Local #562 Pension Fund, claim that Goldman's and JP Morgan's misstatements “artificially inflated prices.”
“While the extent of MF Global’s exposure to European sovereign debt was concealed, the defendants were able to raise some $900 million in the offerings,” the lawsuit went on to say.
MFGlobal, run by former Goldman Sachs co-CEO and former New Jersey Governor Jon Corzine, declared bankruptcy Oct. 31, having sunk the majority of its investments into toxic European sovereign debt. According to Chapter 11 bankruptcy papers, the firm has liabilities of $39.7 billion and assets of $41 billion.
Among the other companies named as defendants in the complaint are Bank of America Corp., Citigroup Global Markets Inc., Deutsche Bank Securities Inc., and Jefferies & Co. According to Bloomberg, the plantiffs seek to represent other shareholders, expanding the suit into a class-action.