Plan B Forum

Goldman Sachs reeling after $1bn fraud accusation


MARCY GORDON
April 18, 2010

THE US government has accused Wall Street's most powerful firm of fraud, saying Goldman Sachs & Co sold mortgage investments without telling buyers the securities were developed with input from a client who was betting on them to fail.

The securities cost investors close to $US1 billion ($1.1 billion) while helping Goldman client Paulson & Co, a hedge fund, to capitalise on the housing bust. The Goldman executive accused of shepherding the deal, Fabrice Tourre, allegedly boasted about the ''exotic trades'' he created.

The civil charges filed by the Securities and Exchange Commission are the US Government's most significant legal action related to the mortgage meltdown that ignited the financial crisis.

The news sent Goldman Sachs shares and the sharemarket reeling as the SEC said other financial deals related to the meltdown continue to be investigated. It was a blow to the reputation of a financial giant that had emerged relatively unscathed from the economic crisis.

http://www.smh.com.au/business/goldman- ... -slgc.html

GOLDMAN SACHS, the world’s biggest investment bank that is now assailed by accusations of fraud, is poised to reignite controversy over bankers’ bonuses by paying its staff more than £3.5 billion for just three months’ work.

The bumper payouts will equate to about £110,000 a head for the firm’s 32,500 employees worldwide, with a handful of top traders expected to be in line for multi-million-pound bonuses.

Close to £600m is expected to be paid to the group’s 5,500 London-based staff for the first three months of this year. This is on a par with their remuneration in 2007, the last year of the boom.

The revelation of the enormous pay deals comes as Goldman prepares for a legal battle with the US government. The group was sued on Friday by the Securities and Exchange Commission, the Wall Street regulator, over claims it defrauded investors of $1 billion. Goldman denies the charges.

http://business.timesonline.co.uk/tol/b ... 100961.ece