Business

Goldman Sachs accused of financial fraud
by Zuzana Zelenakova

US Securities and Exchange Commission that oversees federal securities laws and regulates the industry has filed a lawsuit against Goldman Sachs Friday. According to the SEC the global investment banking firm has been involved in a financial fraud. Reportedly, the charges concern risky mortgages known as collateralized debt obligations which Goldman Sachs was creating and selling without disclosing that a hedge fund Paulson & Co. picked the package and sought to short it by betting against it. Goldman Sachs then sold the package to investors such as foreign banks, insurance companies and so on, which would only make profit in case the bonds gained value. “In sum, Gol! dman Sachs arranged a transaction at Paulson’s request in which Paulson heavily influenced the selection of the portfolio to suit its economic interests, but failed to disclose to investors ... Paulson’s role in the portfolio selection process or its adverse economic interests,“ said the complaint. The firm denied the allegations made by the SEC calling them “completely unfounded in law and fact.” One of the most profitable companies in the history of Wall Street said it would defend its reputation fiercely. Following the announcement of the lawsuit, the firm´s stock dropped 13 percent on Friday which cost Goldman more than $10 million of its market value. There are speculations that the lawsuit may trigger many others. "This is just the tip of the iceberg," said James Hackney, a professor at Northeastern University School of Law. "There are a lot of folks out there in different deals who played similar roles, and once it starts building s! team, plaintiffs' lawyers will figure out this is where the mo! ney is a nd there should be a lot of action." Public in the US strongly opposes the idea of the further bank bailouts as the Wall Street companies are making money on their own once again. To many it is sign that enough of taxpayers´ money was injected into Wall Street.

related story (sgx17044): http://www.france24.com/en/20100416-usa-banking-finance-sec-...

by Zuzana Zelenakova for Cantell TV (http://cantell.tv)

Cantell TV is the fastest growing provider of digital broadcasting coupled with telecommunications, allowing people to easily control, view, upload and share digital content through proprietary interfa! ce coupled with free phone calls. Cantell TV is committed to delivering infinite choices to your world of entertainment at the tip of your fingers.

posted by Blog TechSource @ 3:23 PM