Goldman Sachs Faces More ARS Flak

Law360 (October 6, 2008, 12:00 AM EDT) -- Goldman Sachs & Co. has been hit with a lawsuit alleging it misled two firms into holding onto hundreds of millions of dollars worth of risky auction rate securities when it knew the debt market was collapsing.

The suit, filed Thursday in the U.S. District Court for the Southern District of New York, claims the funds lost by Goldman customers Bankruptcy Management Solutions Inc. and Ocwen Financial Corp. derailed BMS' plans for an initial public offering.

California-based BMS, a former subsidiary of JPMorgan Chase & Co.,...
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