Goldman Sachs faces $1bn fine to draw line under fraud trial
Goldman Sachs could end up paying a $1bn (£670m) fine to settle the case involving alleged fraud brought against the US investment bank by the Securities and Exchange Commission, according to well-placed US sources.
Moves to reach a settlement to avoid a lengthy legal battle are at an early stage but all the signs point to the SEC demanding a high price to wind up the damaging case.
Goldman Sachs refused to comment on the prospects of a deal with the SEC but reports circulating in the US suggest the bank will be willing to pay a penalty on a lesser charge and a recognition that there was no wrongdoing.
The $1bn figure has been gaining credence because it is said to be equivalent to the profit the bank is said to have made on the deal at the centre of the allegations.
Analysts are more conservative about the size of the potential penalties and feel the SEC may be prepared to accept something more modest in a range from $150m upwards.
The SEC has charged Goldman with misleading investors over Abacus, a sub-prime mortgage financial vehicle. It alleges Goldman kept investors in the dark about the $1bn mortgage deal that saw the Royal Bank of Scotland emerge as one of the biggest casualties with a loss of $840m.
Goldman is anxious to draw a line under an episode that has been costly in terms of reputation and share price and made the Wall Street giant the main scapegoat in the financial crisis blame game.
Detailed evidence assembled by Goldman about the behaviour of traders involved in the alleged fraud will be sent to the SEC shortly as part of what is described as a robust defence.
The SEC is said to be veering towards moving to an out-of-court settlement but is determined not to "let Goldman off lightly" because it would send the wrong signals to markets, investors and politicians. Senior figures in the Obama administration are also said to be ready to see an accommodation. Tim Geithner, the Treasury Secretary, and the Federal Reserve are reported to be in favour of a settlement to allow the executive to focus on completing banking reforms.
Goldman executives endured a stormy annual meeting on Friday where faith-based funds and community activists maintained a two-hour blitz on the bank's ethical behaviour.
Lloyd Blankfein, chairman and chief executive, admitted there had been shortcomings and said a new business standards committee is being set up to improve ethical behaviour. It will be chaired by one of Goldman's non-executive directors with Lee Scott, former chairman of Wal-Mart and Lakshmi Mittal, who runs the giant ArcelorMittal steel group, among the front runners to fill the post.
Nessun commento:
Posta un commento