“The SEC’s charges are completely unfounded in law and fact
and we will vigorously contest them and defend the firm and its reputation,”
so said Goldman Sachs & Co. when the SEC filed fraud charges against
the investment banking and management firm. Read our original report here.
According to The Washington Post, it now appears that “vigorously contest” means that Goldman will pay $550 million, the largest fine the SEC has ever levied against a financial company.
Goldman was accused of failing to disclose to investors that Paulson & Co., a hedge fund, was advising Goldman to purchase individual mortgage-related securities that Paulson believed would lose value. Paulson would then in effect “bet against” the investments. When the housing market collapsed, Paulson reaped billions of dollars in profits, while Goldman investors, who believed the investments were designed to earn them a profit, lost a reported $1 billion.
The language of the settlement agreement was carefully negotiated so as not to constitute admissions of wrongdoing by Sachs in pending civil suits against the company. Nevertheless, Goldman expressed “regret” that it had included “incomplete information” in its materials marketing the investment to clients.
Don’t you just love our financial industry?
More fraud related postings:
“Colorado Money Launderer Gets Jail Time,” Colorado Business Litigation Lawyer Blog, posted 04/05/10
“Colorado Man Indicted for Obtaining Fraudulent Mortgages,” Colorado Business Litigation Lawyer Blog, posted 06/22/10