The $3.1 billion Space Coast Credit Union has filed a suit against two investment firms over the alleged misrepresentation of a collateralized debt obligation that the cooperative said led to financial losses.
The Melbourne, Fla.-based credit union claimed that a CDO from Barclays PLC contained assets that were set up to fail. The Barclay Markov CDO is backed by $2 billion of mortgage and other debt, Reuters reported last week. In the Space Coast complaint, State Street Corp., the co-writer of the offer and Markov's collateral manager, is also named.
Space Coast said Barclay's CDO resembled one offered by Goldman Sachs that was the subject of a Securities and Exchange Commission fraud lawsuit. In its April 2010 complaint, the SEC alleged that Goldman misstated and omitted key facts regarding a synthetic CDO that hinged on the performance of subprime residential mortgage-backed securities.
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