Allstate Sues Goldman Over Sale Of $123M In Junk MBS

Law360, New York (August 15, 2011, 10:18 PM EDT) -- Allstate Insurance Co. sued Goldman Sachs Group Inc. in New York on Monday for fraudulently selling $123 million in mortgage-backed securities that were later downgraded to junk status after the housing market collapse.

“Goldman knew these types of securities were, to use Goldman's own words, 'junk,' 'dogs,' 'crap' and 'lemons,'” Allstate said in its complaint.

The insurer has mounted a legal campaign in New York courts to try to recover losses it sustained after MBS widely tanked during the financial crisis. In the past few months, it...
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