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Goldman Sachs Feeling More Heat as US Launches Criminal Investigation
Washington. Increasing pressure on Goldman Sachs two days after its executives were grilled and rebuked in the public glare, the US Justice Department has opened a criminal investigation of the Wall Street powerhouse over mortgage-securities deals it arranged.
The new criminal inquiry follows civil fraud charges filed by the government against Goldman two weeks ago and as the US Congress pushes toward enacting sweeping legislation aimed at preventing another near-meltdown of the financial system.
The investigation by the US attorney’s office in Manhattan stems from a criminal referral by the Securities and Exchange Commission, a person with knowledge of the matter said on Thursday, withholding his name because the inquiry is in a preliminary phase.
The SEC brought civil fraud charges against Goldman and a trader in connection with the transactions in 2006 and 2007. The agency alleged the firm misled investors by failing to tell them the subprime mortgage securities had been chosen with help from a Goldman hedge-fund client, Paulson and Co., that was betting the investments would fail. Goldman and the trader, Fabrice Tourre, have denied the charges and said they would contest them in court.
Word of the Justice Department action came a day after a group of 62 House of Representatives lawmakers, including Democratic Judiciary Committee Chairman John Conyers, asked Justice to conduct a criminal probe of Goldman.
“On the face of the SEC filing, criminal fraud on a historic scale seems to have occurred in this instance,” the lawmakers, mostly Democrats, said in a letter to Attorney General Eric Holder.
Goldman spokesman Lucas van Praag said: “Given the recent focus on the firm, we’re not surprised by the report of an inquiry. We would cooperate fully with any request for information.”
The Goldman saga has pitted the culture of Wall Street against angry lawmakers in an election year, in the wake of the financial crisis that plunged the country into the most severe recession since the Great Depression.
At Congress on Thursday, after days of failed test votes, the Senate lurched into action on sweeping legislation backed by the administration that would clamp down on Wall Street and the sort of high-risk investments that nearly brought down the economy in 2008.
Washington. Increasing pressure on Goldman Sachs two days after its executives were grilled and rebuked in the public glare, the US Justice Department has opened a criminal investigation of the Wall Street powerhouse over mortgage-securities deals it arranged.
The new criminal inquiry follows civil fraud charges filed by the government against Goldman two weeks ago and as the US Congress pushes toward enacting sweeping legislation aimed at preventing another near-meltdown of the financial system.
The investigation by the US attorney’s office in Manhattan stems from a criminal referral by the Securities and Exchange Commission, a person with knowledge of the matter said on Thursday, withholding his name because the inquiry is in a preliminary phase.
The SEC brought civil fraud charges against Goldman and a trader in connection with the transactions in 2006 and 2007. The agency alleged the firm misled investors by failing to tell them the subprime mortgage securities had been chosen with help from a Goldman hedge-fund client, Paulson and Co., that was betting the investments would fail. Goldman and the trader, Fabrice Tourre, have denied the charges and said they would contest them in court.
Word of the Justice Department action came a day after a group of 62 House of Representatives lawmakers, including Democratic Judiciary Committee Chairman John Conyers, asked Justice to conduct a criminal probe of Goldman.
“On the face of the SEC filing, criminal fraud on a historic scale seems to have occurred in this instance,” the lawmakers, mostly Democrats, said in a letter to Attorney General Eric Holder.
Goldman spokesman Lucas van Praag said: “Given the recent focus on the firm, we’re not surprised by the report of an inquiry. We would cooperate fully with any request for information.”
The Goldman saga has pitted the culture of Wall Street against angry lawmakers in an election year, in the wake of the financial crisis that plunged the country into the most severe recession since the Great Depression.
At Congress on Thursday, after days of failed test votes, the Senate lurched into action on sweeping legislation backed by the administration that would clamp down on Wall Street and the sort of high-risk investments that nearly brought down the economy in 2008.
