Goldman Sachs to pay record settlement in fraud suit, change business practices
By Zachary A. Goldfarb
Washington Post Staff Writer
Friday, July 16, 2010
Goldman Sachs agreed Thursday to pay $550 million to settle a fraud suit brought by the Securities and Exchange Commission that accused the storied Wall Street bank of selling a subprime-mortgage investment that was secretly designed to fail.
The fine is the largest the SEC has ever assessed against a financial company. But the settlement also is striking because Goldman agreed to a host of changes to how it does business and because the bank, while not admitting wrongdoing, agreed to express "regret" for including "incomplete information" in marketing materials touting the investment to clients.
By doing so, Goldman acknowledged "the fundamental basis of our complaint," SEC enforcement director Robert Khuzami said at a news conference, standing with 10 colleagues who worked on the case. "Today's settlement is a stark reminder -- a very stark reminder -- that there will be a heavy price to be paid if firms violate the principles fundamental to securities law."
While Goldman will pay only a tiny fraction of its $13 billion in annual profits to resolve the claims, the settlement represents a black mark for the bank, which had insisted since the suit was filed three months ago that it had done nothing wrong. It comes on the same day that Congress sent legislation to the president to curb many Wall Street practices -- including ones that have made Goldman a lot of money.
(More here.)
Washington Post Staff Writer
Friday, July 16, 2010
Goldman Sachs agreed Thursday to pay $550 million to settle a fraud suit brought by the Securities and Exchange Commission that accused the storied Wall Street bank of selling a subprime-mortgage investment that was secretly designed to fail.
The fine is the largest the SEC has ever assessed against a financial company. But the settlement also is striking because Goldman agreed to a host of changes to how it does business and because the bank, while not admitting wrongdoing, agreed to express "regret" for including "incomplete information" in marketing materials touting the investment to clients.
By doing so, Goldman acknowledged "the fundamental basis of our complaint," SEC enforcement director Robert Khuzami said at a news conference, standing with 10 colleagues who worked on the case. "Today's settlement is a stark reminder -- a very stark reminder -- that there will be a heavy price to be paid if firms violate the principles fundamental to securities law."
While Goldman will pay only a tiny fraction of its $13 billion in annual profits to resolve the claims, the settlement represents a black mark for the bank, which had insisted since the suit was filed three months ago that it had done nothing wrong. It comes on the same day that Congress sent legislation to the president to curb many Wall Street practices -- including ones that have made Goldman a lot of money.
(More here.)
Powered by Blogger
0 Comments:
Post a Comment
<< Home