Posted on 16 Aug 2011
Allstate Corp on Monday sued Goldman Sachs Group Inc., accusing the Wall Street bank of causing losses by hiding the risks more than $123 million of mortgage securities it bought.
Allstate, the largest publicly traded U.S. home and auto insurer, has filed several similar lawsuits against other lenders, such as Bank of America Corp., Citigroup Inc and JPMorgan Chase & Co., to recover losses on well over $2 billion of securities it bought.
"Goldman underwrote securities using loans from subprime lenders known for issuing high risk, poor quality mortgages," Allstate said in its complaint, citing an April report by a U.S. Senate subcommittee examining the 2008 financial crisis.
Then, by betting against the securities, Goldman "positioned itself to cash in even more when the true nature of the 'junk' was revealed," Allstate added.
Allstate filed its complaint with the New York State Supreme Court in Manhattan. Goldman spokesman Michael Duvally declined to comment.