Goldman Sachs under criminal investigation
The US attorney's office in Manhattan is conducting a criminal Investigation of Goldman Sachs over mortgage security deal. Securities and Exchange Commission's criminal referral led to the probe.
THE US attorney's office in Manhattan is conducting a criminal Investigation into the affairs of Goldman Sachs over suspect mortgage security deal. Securities and Exchange Commission's criminal referral led to the probe. Earlier this month the SEC filed civil fraud charges against the Goldman and related traders in connection with the transaction in 2006 and 2007.
Goldman spokesman Lucas van Praag said, “Given the recent focus on the firm, we're not surprised by the report of an inquiry. We would cooperate fully with any request for information.
The justice department move was the latest in a dramatic series of turns in the Goldman saga.
In addition to the $2billion so-called collateralized debt obligation the SEC's sub committee analyzed five another transaction totaling around $4.5 billion. These CDO formed a Goldman Sachs conveyor belt that dumped toxic mortgage securities into the blood stream of the financial system.
It is not yet clear the Justice department's inquiry also covered the other five transaction. The investigation opens a new front in the legal aftermath of the meltdown.
Experts are of the view that the SEC civil fraud case against Goldman could be difficult and face pitfall. The great challenge before the agency would be to proof that Goldman mislead the investors. The issues are so complex that Goldman may be able to introduce enough complicating factors to shed some doubt on the SEC's claims.
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