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SEC Adds Top Attorney to Team Heading Case Against Goldman – FOXBusiness.com

June 2, 2010 By Leave a Comment

The Securities and Exchange Commission is adding one of its top litigators to its legal team in its civil fraud lawsuit against Goldman Sachs (GS: 141.85, 0, 0%), a move that could push settlement talks in the case.

According to an SEC document filed with the U.S. District Court in Southern Manhattan on May 28 and released today, the SEC is adding veteran attorney David Gottesman to its group of lawyers who would try the Goldman case.

Among high-profile SEC cases, Gottesman argued the agency’s fraud case against former executives at America Online and PurchasePro.com in 2008. One was found guilty and two others were acquitted.

In 2008, he also tried the SEC’s fraud suit against two former executives of Hayes Lemmerz International, a steel and aluminum wheel manufacturer. A jury found the executives guilty.

Gottesman joined the SEC as assistant chief litigation counsel in 2004. Before then, he was an attorney at the Department of Justice.

via SEC Adds Top Attorney to Team Heading Case Against Goldman – FOXBusiness.com.

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Goldman seeks settlement with SEC | FT.com

May 28, 2010 By Leave a Comment

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.

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US$1 Billion+ settlement? Goldman Sachs Fraud Settlement May Hinge on How SEC Can Justify a Penalty – Bloomberg

May 21, 2010 By Leave a Comment
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Analysts predict Goldman Sachs Group Inc. will pay $1 billion or more to settle a Securities and Exchange Commission fraud suit that triggered a 26 percent drop in the firm’s stock. Extracting such a record-setting penalty may be easier said than done.

When it comes to presenting a settlement for court approval, the SEC will have to “have a good explanation and justification for the number,” said Donald Langevoort, a former SEC attorney who teaches securities law at Georgetown University in Washington.

Looming over negotiations between the SEC and Wall Street’s most profitable investment bank is a reminder from Judge Jed Rakoff that courts can reject settlements — even when the SEC’s adversary is willing and able to pay. Rakoff, a U.S. district court judge in Manhattan, refused to sign off on a $33 million accord with Bank of America Corp. in September, noting that the SEC didn’t adequately explain how it came up with the dollar amount.

A sanction in the range of $1 billion would be hard to support based on the allegations in the Goldman Sachs complaint, according to James Coffman, a former SEC enforcement official who retired in 2007. That figure would be more than double what any Wall Street firm has agreed to pay as part of a civil settlement with authorities.

Under one formula outlined in securities laws, the SEC could impose a maximum $15 million penalty on the bank to resolve fraud allegations that it misled buyers of mortgage- backed investments. That formula has been routinely ignored in enforcement cases and the SEC will seek more from a firm depicted as an icon of Wall Street greed at congressional hearings, Coffman said.

via Goldman Sachs Fraud Settlement May Hinge on How SEC Can Justify a Penalty – Bloomberg.

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Litigation Watch: Goldman Getting Ahead of Bad News? | Westlaw Business

May 10, 2010 By Leave a Comment
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Goldman Sachs’s disclosure pendulum appears to have now sharply swung in the other direction. In so doing, Goldman may be charting a new course for itself, and arguably for the broader world of besieged public companies, by disclosing, with detailed exhibits, the filing of several lawsuits against the firm’s leadership. This extensive disclosure stands in marked contrast to its much-criticized decisions to not disclose its 2009 receipt of a Wells Notice from the SEC, among other things.

On its face, this move seems intended to help Goldman get ahead of the steady drip of bad news and lawsuits. While certainly more forthcoming than the once-reticent bank has been, even this apparent openness is selective. The lawsuits by the shareholders were in response to a complaint filed by the SEC…yet the SEC’s own filing is not attached. Likewise, a class action recently filed by named plaintiff Ilene Richman (representing a class of allegedly harmed shareholders in the firm) is also not attached. Both are alluded to in subtle descriptions in the disclosure text itself.

In particular, Goldman has disclosed that multiple shareholders have filed a succession of derivative lawsuits against certain officers and each member of the board of directors. The lawsuits come on the heels of the SEC filing last month charging Goldman Sachs with fraud. The shareholders are accusing Goldman Sachs of failure to implement risk management controls while engaging in the offer and sale of the ABACUS 2007-AC1 offering, a complex synthetic collateralized debt obligation. The lawsuits also accuse Goldman of breach of fiduciary duty and corporate waste. Goldman Chairman and CEO, Lloyd C. Blankfein, has also been individually named in some of the lawsuits.

via Litigation Watch: Goldman Getting Ahead of Bad News?.

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Goldman Talks Settlement With SEC – WSJ.com

May 7, 2010 By Leave a Comment
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Goldman Sachs Group Inc. lawyers met this week with representatives of the Securities and Exchange Commission in a first step toward a potential settlement of the agency’s fraud lawsuit against the securities firm.

The two sides remain far apart. The preliminary settlement talks, held Tuesday, between Goldman co-general counsel Gregory Palm and other lawyers representing the New York company and SEC officials didn’t include any specific settlement terms, such as the amount of a fine or agreements Goldman could make with the agency, people familiar with the situation said.

Goldman’s willingness to even meet with the SEC is a sign that executives are scaling back their combative stance since the lawsuit was filed April 16. While the company hasn’t retreated from its public statements that the suit’s accusations are groundless, some Goldman executives are taking a softer line with restive shareholders.

The SEC and Goldman declined to comment.

The talks come ahead of Goldman’s scheduled shareholder meeting Friday morning in lower Manhattan. Protesters are expected outside the building. The meeting is expected to be a big departure from the almost perfunctory events of the past, when investors applauded Goldman’s ability to make money at a blistering pace. Also on Friday, Goldman directors are expected to discuss a revision of some company practices in dealing with customers, people familiar with the situation said.

via Goldman Talks Settlement With SEC – WSJ.com.

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Criminal Probe Looks Into Goldman Trading – WSJ.com

April 30, 2010 By Leave a Comment
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Federal prosecutors are conducting a criminal investigation into whether Goldman Sachs Group Inc. or its employees committed securities fraud in connection with its mortgage trading, people familiar with the probe say.

The investigation from the Manhattan U.S. Attorney’s Office, which is at a preliminary stage, stemmed from a referral from the Securities and Exchange Commission, these people say. The SEC recently filed civil securities-fraud charges against the big Wall Street firm and a trader in its mortgage group. Goldman and the trader say they have done nothing wrong and are fighting the civil charges.

Lloyd Blankfein, CEO of Goldman Sachs, during testimony before the Senate Homeland Security and Governmental Affairs Investigations Subcommittee hearing on Tuesday.

Prosecutors haven't determined whether they will bring charges in the case, say the people familiar with the matter. Many criminal investigations are launched that never result in any charges.

The criminal probe raises the stakes for Goldman, Wall Street’s most powerful firm. The investigation is centered on different evidence than the SEC’s civil case, the people say. It couldn’t be determined which Goldman deals are being scrutinized in the criminal investigation.

via Criminal Probe Looks Into Goldman Trading – WSJ.com.

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Civil Complaint for Investment Fraud | Securities and Exchange Commission v Goldman, Sachs & Co. | Justia.com – JDSupra

April 16, 2010 By Leave a Comment

The Securities and Exchange Commission is suing Goldman, Sachs for defrauding investors by misstating and omitting key facts about a financial product tied to subprime mortgages as the U.S. housing market was beginning to falter.

The SEC alleges that Goldman Sachs structured and marketed a synthetic collateralized debt obligation (CDO) that hinged on the performance of subprime residential mortgage-backed securities (RMBS). Goldman Sachs failed to disclose to investors vital information about the CDO, in particular the role that a major hedge fund played in the portfolio selection process and the fact that the hedge fund had taken a short position against the CDO.

Investors are alleged to have lost more than $1 billion.

The SEC’s complaint charges Goldman Sachs and Goldman Sachs Vice President Fabrice Tourre with violations of Section 17(a) of the Securities Act of 1933, Section 10(b) of the Securities Exchange Act of 1934, and Exchange Act Rule 10b-5. The Commission seeks injunctive relief, disgorgement of profits, prejudgment interest, and financial penalties.

Download (PDF, 176.05KB)

via Civil Complaint for investment Fraud | Securities and Exchange Commission v Goldman, Sachs & Co. | Justia.com – JDSupra.

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