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