A Financial Industry Regulatory Authority (FINRA) arbitration panel has ordered Goldman Sachs & Co. to pay $100 million to National Australia Bank relating to the bank’s investment losses in a Goldman Sachs collateralized debt obligation (CDO), known as Hudson Mezz-1 CDO. The FINRA arbitrators found that Goldman Sachs’s marketing materials for the CDO contained material omissions and misstatements regarding Goldman’s conflict of interest. The arbitrators found that Goldman took a short position in, (that is, bet against), the CDO at the time it was selling the CDO to the Australian bank and misrepresented and omitted facts to mask this conflict. The arbitrators awarded National Australia Bank its original $80 million investment and $20 million in interest.
A class action regarding the same CDO was filed against Goldman in 2010. Five years later, that case is still ongoing in court. But National Australia Bank opted out of the class action and filed its own FINRA arbitration claim in December 2012. This highlights one of the reasons why many investors may be better off pursuing an individual FINRA arbitration claim rather than sit back and wait for a possible resolution of a class action. FINRA arbitration claims generally are much faster and more efficient than a class action, and recoveries that investors receive in FINRA arbitration oftentimes are far greater than the pennies-on-the-dollar settlements that frequently occur in class actions.
If you lost money in the Goldman Hudson Mezz-1 CDO or any other structured product, contact our securities attorneys for a free case evaluation. DKR has represented institutional investors throughout the United States and is well-versed in claims of this nature.