Friday, April 16, 2010
Goldmine Sachs gets tagged by the SEC
The New York Times reports the SEC has filed a civil suit against Goldmine and one of its executives for failing to tell investors in one of their investment vehicles Abacus 2007-AC1 was purpose built to fail, with the result that the investors lost most of the $10.9 Billion in they had put into Abacus 2007-AC1.
Goldman Sachs, which emerged relatively unscathed from the financial crisis, was accused of securities fraud in a civil suit filed Friday by the Securities and Exchange Commission, which claims the bank created and sold a mortgage investment that was secretly devised to fail.Based on the details available to the NYT you would think this deserves a full fledged criminal fraud indictment. Perhaps some state AG or US attorney may do so, but the SEC is content to slap the malefactors and say tsk, tsk.
The move marks the first time that regulators have taken action against a Wall Street deal that helped investors capitalize on the collapse of the housing market. Goldman itself profited by betting against the very mortgage investments that it sold to its customers.
The suit also named Fabrice Tourre, a vice president at Goldman who helped create and sell the investment.
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