Goldman Sachs, SEC Reportedly in Settlement Talks
Goldman Sachs lawyers and Securities and Exchange Commission representatives met this week to begin talking about a settlement of the fraud suit against the firm.
These preliminary talks were held Tuesday between SEC officials and Goldman co-general counsel Gregory Palm and other lawyers representing the firm, the Wall Street Journal (sub. req.) reported. No settlement terms emerged with the talks.
Goldman Sachs has been accused by the SEC of creating a mortgage investment designed to fail and profiting on its investors’ losses.
The Wall Street Journal points out that the parallel criminal investigation of Goldman’s mortgage business will necessarily complicate settlement talks because “it is unclear how the lawsuit could be resolved without simultaneously addressing the criminal matter.” At this point, no criminal charges have been filed against Goldman. Also, any settlement would also have to demonstrate that Goldman was punished, while Goldman will want a deal in which it would not have to admit wrongdoing so that it could protect itself from shareholder lawsuits, the Wall Street Journal says.
Goldman Sachs held its annual shareholder meeting today in Manhattan in the midst of these investigations and talks. Goldman CEO Lloyd Blankfein told shareholders Friday that the firm would undertake a “rigorous self-examination” and form a committee to study its business standards, the Financial Times reports. Blankfein did not directly address the Justice Department and SEC allegations in his opening statement (sub. req.), only “a disconnect between how we as a firm view ourselves and how the broader public perceives our role and activities in the market.” The Wall Street Journal’s Deal Journal blog is live-blogging the meeting.
Neither the SEC nor Goldman Sachs would make a comment to the Wall Street Journal.
