Excerpted from “Goldman Sachs settles with SEC
” By Francesco Guerrera, Henny Sender and Justin Baer in New York, Financial Times
, Published: July 15 2010 21:14 | Last updated: July 16 2010 15:52
oldman Sachs agreed on Thursday to pay a lower-than-expected $550m fine to settle US regulators’ accusations that it misled investors in a mortgage-backed security – a move that ends the highest profile regulatory case since the crisis.
Although the penalty is the biggest levied on a Wall Street bank, it amounts to around a week’s worth of trading revenues for Goldman and is below the $1bn fraud the Securities and Exchange Commission had alleged in its complaint in April.
Goldman also succeeded in persuading regulators to move the settlement away from civil fraud accusations to focus on its admission that the marketing materials for the collateralised debt obligation “contained incomplete information”.
The bank said it was a “mistake” to state that the loans contained in the CDO had been selected by a third party without mentioning the role of Paulson & Co, a hedge fund that bet against the security.
Goldman, which had denied the SEC accusations, did not admit or deny the charges, as it is customary in these cases, but did pledge improvements to its internal practices and controls. …