US market regulator sues Goldman Sachs for fraud
Washington, Apr 17: US market regulator, Securities and Exchange Commission (SEC), has sued Goldman Sachs on charges of fraud.
The SEC on Friday, Apr 16 announced that it has charged the investment bank with “defrauding investors by misstating and omitting key facts about a financial product tied to subprime mortgages," in the run up to the 2008 financial crisis derailing the global economy.
The vice president of Goldman Sachs has also been named in the suit filed in a US court in the Southern District of New York.
Tourre has been accused of devising the transaction, preparing the marketing materials and communicating directly with investors while having the knowledge of Paulson and Company's short interest in the instruments and its role in the collateral selection process.
SEC alleged that Goldman assisted Paulson bet against its own sub-prime mortgage-backed securities, which formed a huge portion of the US housing market.
It was the fall of the housing market that led Wall Street's near-collapse in Oct 2008.
As per the SEC filing, Goldman Sachs' fraudulent activities cost the investors more than 1 billion dollars.