![]() Goldman believes the charges are politically motivated and come at a time when President Barack Obama is trying to force through legislative changes to clean up the US banking industry. ![]() The SEC asserts that Goldman did not disclose Paulson was on the other side the transaction. During the same period, Paulson made a similar amount in profit. The mortgages were packaged into a collateralised debt obligation (CDO) – the instruments at the heart of the 2007 credit crisis – and lost investors more than $1bn in just nine months. The SEC's 22-page suit charges Goldman with working with US hedge fund, Paulson & Co, to structure and sell a complex package of mortgages to clients while Paulson took a "short" position betting that the same mortgages would fail. It said: "Based on all that we have learned, we believe that the firm's actions were entirely appropriate, and will take all steps necessary to defend the firm and its reputation by making the true facts known." In a detailed statement today, Goldman stepped up its defence. ![]() We are working closely with overseas regulators and will co-operate fully with the SEC investigation" the FSA said. If there are, we will take appropriate action. "As you would expect the FSA is investigating the circumstances of this case and whether there are any implications for the UK-regulated entities of Goldman Sachs. The FSA confirmed today that it was investigating the events. The statement comes ahead of the bank's first-quarter results tomorrow, which are expected to show it has been able to earmark $5bn for staff pay and bonuses.Īs Fabrice Tourre, the bank's 31-year-old vice-president named in the case brought by the SEC stayed away from his desk in the London headquarters of the firm, calls were mounting for the City's watchdog, the FSA, to launch its own inquiry into the affair which dates back three years. Goldman stressed that it had lost $90m on the transaction, known as Abacus 2007-AC1, and tried to argue that its clients had been professional investors highly experienced in the complex financial instruments they were buying. Goldman Sachs insisted its actions were "entirely appropriate" and that it would "vigorously contest" the charges brought by the US Securities and Exchange Commission (SEC). Embattled Wall Street firm Goldman Sachs is now facing an investigation by the City watchdog, the Financial Services Authority, following the $1bn (£650m) fraud allegations brought by the US regulators.
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