Goldman Sachs is hoping to avoid the Securities and Exchange Commission’s charge of fraud by reaching a settlement on a lesser offence and agreeing to a fine of hundreds of millions of dollars, according to people familiar with the bank’s negotiating position.
Goldman, which has been accused of civil fraud over a complex mortgage-related security called Abacus, is trying to focus settlement talks with the SEC on the less serious charge of omitting or mis-stating material facts to investors.
Regulatory experts say that companies charged with fraud often seek a settlement on a lesser charge but it is unclear whether the SEC would agree to downgrade such a high-profile case.
A lesser charge would reduce Goldman’s risk of being sued by investors and help the bank avoid the reputational damage of having settled a fraud charge, according to people familiar with the situation.
People involved in the discussions say that, even if regulators agree to consider a lesser charge, Goldman would neither admit nor deny wrongdoing – a common practice among companies settling with the SEC.
Goldman and the SEC declined to comment.
In a note to clients on Thursday, Brad Hintz of Bernstein Research estimated that Goldman might pay a fine of $250m and compensate investors by buying out their exposure to the Abacus deal at a cost of $370m.
via FT.com / Companies / Banks – Goldman seeks settlement with SEC.
