Goldman loses bid to dismiss Hudson CDO lawsuit

NEW YORK (Reuters)—A federal judge refused to dismiss a lawsuit accusing Goldman Sachs Group Inc. of defrauding investors in the offering of risky debt linked to subprime mortgages.

U.S. District Judge Victor Marrero in Manhattan dismissed part but not all of the lawsuit brought by Dodona I L.L.C., a hedge fund formed in 2007 to invest in pieces of collateralized debt obligations.

Dodona accused Goldman of creating the Hudson Mezzanine Funding CDOs as part of an undisclosed scheme to reduce its subprime exposure at the expense of investors, and to bet against those CDOs.