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Goldman Sachs stockholders granted class status to sue bank over crisis-era CDOs

A U.S. district judge granted permission to Goldman Sachs Group Inc. stockholders to pursue a class-action lawsuit against the bank for failing to reveal conflicts of interest related to risky subprime securities before the financial crisis.

The decision allows the plaintiffs to form a class, overriding a January ruling that denied the plaintiffs' class status.

According to January court documents, the investors, which include the Arkansas Teacher Retirement System, allege that they lost more than $13 billion between February 2007 and June 2010 because Goldman Sachs made false statements about its ability to manage conflicts, while hiding short positions that were made in four subprime mortgage collateralized debt obligations.

The CDOs, which centered around Abacus 2007 AC-1, led to Goldman Sachs' $550 million settlement of civil claims brought by the U.S. Securities and Exchange Commission. In the settlement, the bank did not admit to the charges of wrongdoing levied against it.

Goldman Sachs declined to comment on the matter.