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SEC accuses Goldman Sachs of civil fraud - Yahoo! News
Goldman of course denies any wrongdoing. So, this goes somewhat over my head, but I find the topic interesting. Does the government have a solid case here?
AP 1:45 pm-The government has accused Goldman Sachs & Co. of defrauding investors by failing to disclose conflicts of interest in subprime investments it sold as the housing market was collapsing.
The Securities and Exchange Commission said in a civil complaint Friday that Goldman failed to disclose that one of its clients helped create — and then bet against — subprime mortgage securities that Goldman sold to other investors.
...
Goldman told investors that a third party, ACA Management LLC, had selected the pools of subprime mortgages it used to create what are known as synthetic collateralized debt obligations. But, the SEC alleges, Goldman misled investors by failing to disclose that Paulson & Co. also played a role in selecting the mortgage pools and stood to profit from their decline in value.
"Goldman wrongly permitted a client that was betting against the mortgage market to heavily influence which mortgage securities to include in an investment portfolio, while telling other investors that the securities were selected by an independent, objective third party," Khuzami said in a statement.
Goldman of course denies any wrongdoing. So, this goes somewhat over my head, but I find the topic interesting. Does the government have a solid case here?