Goldman Sachs Faces Lawsuit
By Arnab Ghosh, Gaea News NetworkSaturday, April 17, 2010
WASHINGTON (GaeaTimes.com)- Reputed US investment giant Goldman Sachs has been hogging the focus of the media since the US Securities and Exchange Commission has accused it of fraudulent behavior and misleading the investors. The investment entity has been slapped a civil lawsuit by the federal regulators. According to the accusation, Goldman Sachs knowingly sold risk prone subprime mortgage securities to some of its investors and it cost those investors a huge loss amounting to $1 billion. The SEC has accused that Goldman Sachs did not inform the investors that Paulson & Co, the hedge fund dealt with risk prone subprime mortgages. The allegation remains to be proved but it points to the same serious cause that played a pivotal role behind the failure of Wall Street financial entities few years back.
The lawsuit had a direct impact on the shares of Goldman Sachs which plummeted significantly yesterday and impacted the Dow Jones Industrial Average as well. Fabrice Tourre who is the vice president of the investment firm has also come under the scanner of SEC. The Vice president allegedly ignored his responsibilities and did not fully understand the complication involved in the transaction.
As per the SEC allegation, the investors lost money in the deal whereas both Paulson & Co and Goldman Sachs made profits. Goldman Sachs has strongly denied the accusations filed by SEC and said that it will take legal recourse to safeguard its reputation. Refuting the claim of the SEC, the investment firm said that it also lost close to $90 million in the disputed deal.
