By Louise Story and Gretchen Morgenson
Goldman Sachs, which emerged relatively unscathed from the financial crisis, was accused of securities fraud in a civil suit filed Friday by the Securities and Exchange Commission, which claims the bank created and sold a mortgage investment that was secretly devised to fail.
The move marks the first time that regulators have taken action against a Wall Street deal that helped investors capitalize on the collapse of the housing market. Goldman itself profited by betting against the very mortgage investments that it sold to its customers.
The suit also named Fabrice Tourre, a vice president at Goldman who helped create and sell the investment.
In a statement, Goldman called the S.E.C. accusations “completely unfounded in law and fact” and said the firm would “vigorously contest them and defend the firm and its reputation.”
The instrument in the S.E.C. case, called Abacus 2007-AC1, was one of 25 deals that Goldman created so the bank and select clients could bet against the housing market. Those deals, which were the subject of an article in The New York Times in December, initially protected Goldman from losses when the mortgage market disintegrated and later yielded profits for the bank.
Continue reading the article. . .
View the Complaint. . .
Catherine Austin Fitts’ Blog Commentaries
UK FSA & US FINRA Notify Goldman of Investigations 10 May 10
Thumbing Down on Blankfein 5 May 10
Feds Launch Criminal Investigation of Wall Street Giant Goldman Sachs 29 Apr 10
Goldman Whac-A-Mole 29 Apr 10
Goldman Testifies 27 Apr 10
Goldman’s CEO & Board of Directors Sued Over SEC Claims 27 Apr 10
Goldman’s E-Mails 25 Apr 10
Goldman & Mortgage Market Fraud 19 Apr 10
Jim Johnson, Goldman Sachs Director 19 Apr 10
Goldman Sachs Leaders 19 Apr 10
Goldman Director Rajat Gupta to Leave 19 Apr 10
Chart of the Day: Goldman’s $12 Billion Bloodbath 19 Apr 10
Related reading:
Goldman Sachs Settlement May Hinge on How SEC Justifies Penalty
Bloomberg.com (21 May 10)
Goldman Case Gets Decisive, Compassionate Jurist
Yahoo Finance (16 May 10)
An Updated List of Goldman Sachs Ties to the Obama Government Including Elena Kagan
The Seminal (8 May 10)
Goldman Warns of More Litigation, Investigations
Yahoo Finance (10 May 10)
Goldman Puts Buffett Ethical Values in Spotlight
Reuters (28 April 10)
10 Things You Don’t Know (or were misinformed) About the GS Case
The Big Picture (23 April 10)
Former Federal Pensions Chief Faces Criminal Probe
Bloomberg Businessweek (14 May 2009)
Blankfein Plays Dumb, But Did Tourre Just Sink Wall Street?
The Huffington Post (28 April 10)
Goldman Armed Salespeople to Dump Bonds, E-Mails Show
Bloomberg.com (28 April 10)
Blankfein Says Firm Doesn’t Need to Disclose Position
Bloomberg.com (28 April 10)
Lawmaker Says Goldman Made Tourre “Whipping Boy”
Reuters (27 April 10)
Steven G. Brant: The Death of Goldman Sachs
GATA (27 April 10)
E-mail Suggests Goldman Knew Harvard Would Lose
Boston.com (26 April 10)
Goldman Sachs’s Tourre to ‘Categorically’ Deny SEC’s Claims
Bloomberg.com (27 Apr 10)
Goldman Sachs CDO Labeled ‘Shi**y Deal’ by Montag in E-Mail
Bloomberg.com (27 April 10)
Probe, Suit Force Goldman to Defend Actions in Crisis
The Washington Post (27 April 10)
Goldman Sachs Abacus E-mails Show Hunt for ‘Easiest’ Asset Firm
Bloomberg Businessweek (26 April 10)
Goldman Sachs complex debt products “pure intellectual masturbation”
TimesOnline (25 Apr 10)
1-Ex-VP Sues Goldman Over “Mommy Track”
Reuters (24 Mar 10)
Goldman Slapped
Bloomberg.com (22 Apr 10)
UK Regulator to Investigate Goldman Sachs
Business Standard (21 Apr 10)
Goldman CEO to Testify Before Senate
Associated Press (21 Apr 10)
German Bank Severs Goldman Ties
Reuters UK (21 Apr 10)
View the video at YouTube. . .
Goldman Earnings Beat Overshadowed By UK Probe Reuters (20 April 10)
Goldman Trader Takes Time Off; Reform Momentum Grows Reuters (20 April 10)
SEC Split on Party Lines Over Goldman Case The Wall Street Journal (20 April 10)
Senior Executives at Goldman Had a Role in Mortgage Unit The New York Times (18 April 10)
SEC Charges Against Goldman Sachs May Trigger Torrent Of Lawsuits GATA (18 April 10)
The Wells Notice in SEC and NASD Investigations SECLaw.com (April 2010)
Did Goldman And Tourre Break FINRA Regulations By Not Reporting “Fab Fabrice’s” Wells Notice Receipt? Zero Hedge (17 April 10)
For Goldman, a Bet’s Stakes Keep Growing The New York Times (17 April 10)
The Tale Of The Two Paulsons MMNews (17 April 10)
Goldman Sachs Said to Have Been Warned of SEC Suit BusinessWeek (16 April 10)
Investor Who Made Billions Is Not Target of Suit The New York Times (16 April 10)
Goldman Wins $4bn On US Sub-prime Bet TimesOnLine (14 Dec 07)
Goldman Sachs sued by SEC for Fraud Tied to CDOs Bloomberg.com (16 Apr 10)
Talk From the Pits: Goldman Sold 1,000 Large S&Ps Earlier ZeroHedge (16 Apr 10)
Goldman’s $12 Billion Bloodbath Clusterstock (16 Apr 10)
Goldman Serves One Master Better Than the Other Bloomberg (16 Apr 10)
CT Attorney General: “We are reviewing what we can do Goldman should be criminally investigated” MSNBC (16 Apr 10)
AIG: Surging on Hopes of Legal Claims Against Goldman Sachs Zero Hedge (16 Apr 10)
Sullivan & Cromwell Richard H. Klapper representing Goldman Sachs
Banks Bundled Bad Debts, Bet Against It and Won New York Times (23 Dec 09)
