NEW YORK (

TheStreet

) --

Goldman Sachs

(GS) - Get Report

is being sued by the National Credit Union Administration for alleged violation of federal and state securities laws in the sale of $1.2 billion in mortgage-backed securities,

Bloomberg

reported Tuesday.

The lawsuit alleges that the securities sold to two failed corporate credit unions were designed to perform poorly. The NCUA is seeking $491 million in damages from Goldman Sachs, according to the report.

Shares of Goldman were down 3.2% at $113.90.

Goldman Sachs declined comment.

--Written by Shanthi Bharatwaj in New York

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