The Dutch pension fund Pensioenfonds Vervoer has accused Goldman Sachs Asset Management of breaching its fiduciary duty by making inappropriate investments during the financial crisis, filing two claims against the bank totaling up to $300 million.
(July 10, 2012) — A Dutch pension fund has hit Goldman Sachs with a multimillion dollar lawsuit alleging investing improprieties from 2006 to 2010, the latest example of the continued legal fallout from the global financial crisis.
Pensioenfonds Vervoer, the $13.5 billion pension fund of Dutch transport workers, filed two claims against Goldman Sachs Asset Management (GSAM) totaling up to €240 million ($300 million) at the High Court in London on Monday, Reuters reported. The fund alleged that GSAM improperly invested in funds during the financial crisis, leading to a loss of 14.1% in 2008. One of the claims accuses Goldman of improper investments in subprime debt in 2007. The other alleges that the bank was too slow to invest in global high yield bonds in 2009, leading to substantial losses that could have been avoided, according to Reuters.
"We acted prudently and complied with our mandate, fulfilling our obligations to our client,” a spokesman for Goldman told Reuters. “We believe the claim is without merit based on the facts of the situation, and we will certainly contest it."
In 2010, Pensioenfonds Vervoer sacked GSAM three days after the Securities and Exchange Commission (SEC) accused Goldman of defrauding its clients through the Abacus collateralized debt obligation investment. According to the SEC, Goldman encouraged its clients to invest in the vehicle without telling them that another client, hedge fund manager John Paulson, was aggressively shorting that investment. At the time, the fund denied that GSAM’s dismissal was related to the SEC’s charges.
Other banks are wrestling with the legacy of missteps during the financial crisis. Last week, BNY Mellon agreed to pay a group of investors, including some pension funds, $280 million to settle a lawsuit relating to securities lending losses in 2008.