Business Loan

Posted on 16th Apr 2010 @ 3:53 PM

The S.E.C. Accuses Goldman Sachs of Fraud

Goldman Sachs, one of the premier financial companies of the world, has been accused of fraud over the housing market deal today, as Goldman stocks fell sharply by 13%, and took along with them the whole stock market for a decline following the news announcement.

This legal action is largely seen as a punitive action against Goldman Sachs on a deal that the latter engineered to enable its investors to make a profit on the downfall of the housing market.

The S.E.C. alleges that the bank marketed a complex sub-prime mortgage package but did not reveal that a major hedge fund had bet against the securities.

Goldman's shares fell more than 10% on the news of the accusations against the firm and one of its vice presidents.

The bank escaped relatively unscathed from the financial crisis.

'Regulation risk'

The SEC said that investors had lost about $1 billion in the rogue product - known as Abacus.

This is the first time regulators have acted against a Wall Street deal that allegedly helped investors take advantage of the US housing market collapse.

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