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Goldman Sachs Faces Civil Fraud Charges

Here we go again. Another Wall Street giant has been accused of defrauding its investors. Goldman Sachs & Co., a global investment banking and management firm, allegedly failed to disclose conflicts of interest in mortgage investments it sold during the failing housing market. Fabrice Tourre, a Goldman Sachs vice president, has also been charged by the SEC for his involvement. The Securities and Exchange Commission announced the charges last Friday.
According to Marcy Gordon with the Associated Press, Paulson & Co. is the Goldman Sachs client being investigated. The AP identifies Paulson as “one of the world’s largest hedge funds” and reports them as having paid Goldman approximately $15 million in 2007 for structuring the deals. Losses by investors reportedly exceed $1 billion.
The SEC allegations suggest Goldman failed to disclose to investors that Paulson & Co.
played a part in selecting mortgages and were in a position to profit from the waning mortgage values. Investors were told an independent, objective third party selected the securities.
The Goldman Sachs website reported the following statement today: “The SEC’s charges are completely unfounded in law and fact and we will vigorously contest them and defend the firm and its reputation.”
We will follow the saga and continue to report on it.

Guilty Plea in Galleon Insider Trading Case, CO Business Litigation Lawyer Blog, Jan. 7, 2010
Insider Trading: A New Twist, CO Business Litigation Lawyer Blog, May, 21, 2009

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