Client of Berger & Montague, P.C. Files Securities Class Action Lawsuit Concerning Two CDOs Sponsored by Goldman, Sachs & Co.

PHILADELPHIA, Oct. 4 /PRNewswire-USNewswire/ -- On September 30, 2010, a client of the law firm of Berger & Montague, P.C. filed a class action suit against Goldman, Sachs & Co., The Goldman Sachs Group, Inc., Hudson Mezzanine Funding 2006-1, Ltd., Hudson Mezzanine Funding 2006-1, Corp., Hudson Mezzanine Funding 2006-2, Ltd., Hudson Mezzanine Funding 2006-2, Corp., Peter L. Ostrem and Darryl K. Herrick (collectively, the “Defendants”) in the United States District Court for the Southern District of New York. The case is captioned Dodona I, LLC v. Goldman, Sachs & Co., et al., No. 10 Civ. 7497 (S.D.N.Y.). A copy of the complaint may be obtained via Berger & Montague’s website, http://www.bergermontague.com/, or the office of the clerk of the Court.

The action concerns two offerings of collateralized debt obligation (“CDO”) securities sponsored by The Goldman Sachs Group, Inc. (“Goldman”). The first CDO was issued on or about December 5, 2006, and comprised a $837 million offering of securities co-issued by Hudson Mezzanine Funding 2006-1, Ltd. (“Hudson 1 Ltd.”) and Hudson Mezzanine Funding 2006-1, Corp. as to all tranches except for the Class E and Income Note tranches, the latter two of which were issued solely by Hudson 1 Ltd., as well as a senior swap transaction with an initial notional amount of $1.2 billion (the “Hudson 1 CDO”). The second CDO was issued on or about February 8, 2007, and comprised a $407.9 million offering of securities co-issued by Hudson Mezzanine Funding 2006-2 Ltd. (“Hudson 2 Ltd.”) and Hudson Mezzanine Funding 2006-2 Corp. as to all tranches except for the Class E and Income Note tranches, the latter two of which were issued solely by Hudson 2 Ltd. (the “Hudson 2 CDO”). The value of the securities issued by both the Hudson 1 CDO and the Hudson 2 CDO (collectively, the “Hudson CDO Securities”) depended in significant part on the value of highly risky subprime-related and other residential mortgage-backed securities, many of which were sponsored by subprime mortgage lenders such as Long Beach, New Century, Fremont, Countrywide, Lehman Brothers and Bear Stearns. The Hudson CDO Securities were underwritten, offered and sold by Goldman’s wholly-owned broker/dealer subsidiary, defendant Goldman, Sachs & Co. (“GS&Co”). Additionally, two former senior Goldman officials, defendants Peter L. Ostrem and Darryl K. Herrick, helped lead in structuring and selling the Hudson CDO Securities, among other things.

The complaint alleges that the Defendants violated section 10(b) of the Securities Exchange Act of 1934 and New York common law in structuring, offering and selling to plaintiff and other investors the Hudson CDO Securities. More specifically, plaintiff alleges that in a classic case of “heads we win, tails you lose,” the Defendants failed to disclose to investors both that the Hudson CDO Securities were structured by Defendants such that they were doomed to lose value, and that Goldman would profit from its own short positions when the Hudson CDO Securities did lose value. The securities issued by the Hudson 1 CDO reportedly suffered their first ratings downgrade in early September of 2007; by the end of 2007, at least $280 million of the securities were downgraded; and by at least mid-2008, the Hudson 1 CDO’s AAA-rated securities had been downgraded to junk status. In addition, certain principal of the Hudson 1 CDO securities was reportedly paid off in or about April and May of 2009, with investors in several of the tranches losing millions of dollars, as alleged more fully in the complaint.

Similarly, by the end of 2007, at least $144 million of the securities issued by the Hudson 2 CDO had been downgraded. On August 20, 2008, $286 million of the securities issued by the Hudson 2 CDO were further downgraded by Standard & Poor’s.

The action is brought on behalf of those who, from the initial offerings through September 30, 2010 (the date plaintiff’s complaint was filed), purchased or otherwise acquired the Hudson CDO Securities, and were damaged thereby. Plaintiff is represented by Berger & Montague, P.C., and local counsel Frydman, LLC. Headquartered in Philadelphia, Berger & Montague, P.C., helped pioneer class action litigation and today, after over 35 years of experience, is one of the largest and most highly regarded firms in the country representing parties in securities litigation and other types of complex litigation.

The specific Hudson CDO Securities, together with their CUSIP numbers, are as follows:

If you purchased any of the Hudson CDO Securities during the applicable period, you may, no later than 60 days from today, move to be appointed as Lead Plaintiff. A Lead Plaintiff is a representative party that acts on behalf of other class members in directing the litigation. Any purchaser of any of the Hudson CDO Securities during the applicable period may move the court to serve as Lead Plaintiff through counsel of their choice, or may choose to do nothing and remain an absent class member. However, absent class members may share in any recovery whether or not they serve as a Lead Plaintiff. Therefore, the ability of investors in the Hudson CDO Securities to share in any recovery is not affected by the decision whether or not to serve as a Lead Plaintiff. You may also contact your own counsel or Berger & Montague, P.C. for a more thorough explanation of the Lead Plaintiff selection process.

If you have any questions concerning this notice or your rights with respect to this matter, please contact:

SOURCE Berger & Montague, P.C.