Goldman Sachs and SEC 'set for talks over fraud charges'

5 May 2010

Goldman Sachs is ready to enter into talks with the Securities and Exchange Commission (SEC) over a potential settlement deal that would bring about the end of the fraud charges that have been made against the bank, it has been reported.

The regulator has brought a case against the bank claiming that it encouraged clients to invest in mortgage-backed securities that had been set up to fail.

While Goldman Sachs has robustly defended itself against the charges, the bank has had to weather a storm of criticism and a series of mismanagement lawsuits brought against it by clients in the wake of the allegations.

According to Fox Business Network's Charlie Gasparino, a senior executive at the financial institution has said Goldman Sachs is willing to enter into talks with the SEC to avoid further damage being done to the reputation of the Wall Street giant.

However, it is unclear whether the SEC would be willing to cut a deal with the bank given the high-profile nature of the case.

While Goldman Sachs will be pushing for the regulator to drop its civil fraud charges for lesser charges and a fine, the SEC are unlikely to want to agree to any settlement that will be viewed as lenient, Mr Gasparino added.

The hostility between the two parties took another twist yesterday (May 4th 2010), as Goldman Sachs' market-making unit was fined $450,000.

Its fine will be divided equally between the SEC and the New York Stock Exchange Regulation body after a joint investigation between the agencies revealed hundreds of violations in the division's processing of short trades.

The alleged wrongdoing took place during December 2008 and January 2009, with Goldman Sachs agreeing to pay the fine without admitting to the charges made against it.

According to the bank, the violations were the result of a processing error and clients were not financially affected by the mistake.

By Gary Cooper

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