24 Apr 2010

Goldman Sachs accused of fraud by US regulator SEC

Goldman's Blankfein in fraud case

Goldman Sachs' chief executive, Lloyd Blankfein, is being sued by shareholders.

He and other company officials have been named in two new lawsuits filed on Thursday.

The cases are related to fraud allegations brought last week by the US federal government.

These latest complaints were filed in the New York State Supreme Court. Two shareholders accuse them of breaching their fiduciary duties.

They say the executives did this by allowing Goldman's to enter into a series of transactions, known as Abacus, involving investments tied to subprime mortgages. Abacus was the subject of a civil fraud lawsuit filed against Goldman on 16 April by the US financial watchdog, the Securities and Exchange Commission.

GOLDMAN SACHS GROUP INC. Last updated: 23 Apr 2010, 20:59 UK *Chart shows local time price change % 157.40 -1.65 -1.04

More data on this share price That concerns Goldman's marketing of sub-prime mortgage investments just as the US housing market faltered.

The SEC said Goldman failed to disclose "vital information" that one of its clients, Paulson & Co, helped choose which securities were packaged into the mortgage portfolio.

These securities were sold to investors in 2007.

But Goldman did not disclose that Paulson, one of the world's largest hedge funds, had bet that the value of the securities would fall.

Goldman has called those allegations unfounded.

There was no immediate comment on the latest development from Goldman Sachs.

Story from BBC NEWS:

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