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Archive for the ‘Goldman Sachs’ Category


Goldman Sachs faces regulators over mortgage backed securities

Goldman Sachs received a so-called Wells notice Feb. 24 from the Securities and Exchange Commission relating to disclosures for a late-2006 offering of $1.3 billion in subprime residential mortgage-backed securities, the firm said today in an annual financial report. Wells Fargo said it also got an SEC notice as the government examines whether it properly described facts and risks in offering documents.

Almost four years after mounting mortgage defaults prompted unprecedented government bailouts of the financial system, regulators are still examining how banks packaged and sold home loans to investors. The SEC is looking for evidence that firms failed to disclose underlying credit weaknesses in mortgage pools and delinquencies, Jason Anthony, special counsel for the agency’s structured products unit, said last week. He didn’t identify companies under scrutiny.

SEC lawyers send Wells notices when they intend to recommend that the agency bring claims.

US Files Suit Against Goldman Sachs

Regulators filed a lawsuit Tuesday against Goldman Sachs Group Inc., accusing the investment bank of violating federal and state securities laws in the sale of $1.2 billion in mortgage-backed securities.

The lawsuit, filed in U.S. District Court in Los Angeles, seeks damages in excess of $491 million. It is the fourth securities lawsuit to be filed in recent months by the National Credit Union Administration, which has been negotiating for months with a variety of banks that sold mortgages securities to failed credit unions it has taken over.

The lawsuit alleges that the securities sold by Goldman Sachs to two failed corporate credit unions were “destined to perform poorly.”

SEC Accuses Goldman Sachs of Fraud In Connection with Bet Against Subprime

The government has accused Goldman Sachs & Co. of defrauding investors by failing to disclose conflicts of interest in mortgage investments it sold as the housing market was faltering.

The Securities and Exchange Commission announced Friday civil fraud charges against the Wall Street powerhouse and one of its vice presidents. The agency alleges Goldman failed to disclose that one of its clients helped create — and then bet against — subprime mortgage securities that Goldman sold to investors.

Investors in the mortgage securities are alleged to have lost more than $1 billion, the SEC noted. The agency is seeking to recoup profits reaped on the deal.

The Goldman client implicated in the fraud is one of the world’s largest hedge funds, Paulson & Co., which paid Goldman roughly $15 million for structuring the deals in 2007.

Goldman Sachs shares fell more than 12 percent after the SEC announcement, which also caused shares of other financial companies to sink. The Dow Jones industrial average fell more than 120 points in midday trading.

The civil lawsuit filed by the SEC in federal court in Manhattan was the government’s most significant legal action related to the mortgage meltdown that ignited the financial crisis and helped plunge the country into recession. The SEC’s enforcement chief said the agency is investigating a wide range of practices related to the crisis.

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