The Securities and Exchange Commission accused Goldman Sachs of Fraud

The Securities and Exchange Commission accused the biggest investment bank from Wall Street of fraud for omitting information about CDO’s (products of collateral debt). The new has fallen like a jar of cold water to goldman Sachs, that lost a 13% of his share value in just 1 day . And provocated a strong wave of sales in international markets.

The Securities and Exchange Commission accused Goldman Sachs of committing fraud in the structure and commercialization of CDO’s. These financial products of non-equity share,gathered under a single umbrella several different kinds of emissions, among them, high risk mortgages.

The Securities and Exchange Commission has several reasons to accuse Goldman Sachs, first of all the SEC pointed that “the vice president of Goldman Sachs, Fabrice Tourre, defrauded the investors when launching incorrect information and omitting key details about the financial products aggregated to trash mortgages, when the residential market of the united states began to give debility signs”. This CDO was known as Abacus, whose responsible was Tourre himself.

In his declaration, the Securities and Exchange Commission also alleged that “the risk equity fund, Paulson & Co, paid to Goldman Sachs a transaction where they could take short positions against mortgage backed values”.

According the information apported by the government of the United States, Paulson & Co could have paid $15 million for structures in a collateral debt emission, that closed o April 26th of 2007. Nine months lather, the 99.5 % of the equities could be got degraded, assured the Securities and Exchange Commission , and according the calculations from the institution, could have caused loses higher than $1000 million.

The answer of Goldman Sachs calificated the accusations from the Securities and Exchange Commission as “totally unfounded”. “The accusations by the Securities and Exchange Commission are totally groundless in fact and right, and we will defense ourselves with determination to defend Goldman Sachs and its reputation”, said Goldman Sachs in a short communication.

According the Securities and Exchange Commission , Goldman Sachs did not say to investors that they were buying his CDO that really Paulson & Co participated in the design of the product and pressed to include low quality mortgages, Goldman Sachs said the investors that the mortgages were selected by ACA, an independent firm.

The director of the surveillance division in Securities and Exchange Commission , Robert Khuzami, detailed that “this is a new and complex product but the deception and the conflict are ancient and simple” the Securities and Exchange Commission pointed that Goldman Sachs “accepted mistakenly amongst it customers somebody that was betting among the market of mortgage backed equities”.

Since that turbulences in mortgage markets began in 2007, Goldman Sachs had been recognized by investors as one of the biggest winners of the financial crisis and is considered as one of the most influential entities worldwide.

Related posts:

1. Goldman Sachs believes that Wall Street will skyrocket
2. Goldman Sachs Protagonized The fear of Bankrupt in Wall Street
3. The trap of mortgages in Japanese Yens
4. The Federal Reserve asked for help from government and companies
5. The Federal Reserve Closed 2009 With Record Profits