Details of SEC settlement with Goldman Sachs

Goldman Sachs Group Inc reached a $550 million settlement with the U.S. Securities and Exchange Commission on Thursday to resolve a civil fraud lawsuit over subprime mortgage-linked products it offered to investors.

Here are details of the pact:

* Settlement resolved April 16 lawsuit accusing Goldman of misstating and omitting key facts about its offerings of collateralized debt obligations linked to risky mortgage securities in early 2007.

* Of the $550 million to be paid by Goldman, $250 million would be returned to investors; $300 million would be paid to the U.S. Treasury.

* Settlement requires approval by U.S. District Judge Barbara Jones in Manhattan

* Settlement does not resolve SEC charges against Goldman vice president Fabrice Tourre, the lone individual defendant named in the original lawsuit. SEC says its litigation against Tourre continues.

* Settlement requires "remedial action" by Goldman in its review and approval of offerings of certain mortgage securities.

* Goldman said in the settlement that it is conducting a review of its business standards.

* Settlement said Goldman acknowledged that marketing materials for the CDO at issue in the case, known as ABACUS 2007-AC1, "contained incomplete information."

* Goldman said in the settlement that "it was a mistake" for its ABACUS marketing materials to state that portfolio was "selected by" ACA Management LLC without disclosing that hedge fund Paulson & Co Inc, which was betting against the underlying securities, helped choose the portfolio.

[Source: Reuters, New York, 15Jul10]

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