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Monday 13th of September 2010

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September 9, 2010

FSA to fine Goldman Sachs £20m

by Gill Montia

Story link: FSA to fine Goldman Sachs £20m

The Financial Services Authority (FSA) is to fine Goldman Sachs £20 million, the BBC has reported.

The fine is connected to the Wall Street bank’s run in earlier this year with the US Securities and Exchange Commission (SEC), over a collateralised debt obligation (CDO) that turned sour.

In July, Goldman paid a $550 million penalty to the SEC to settle civil allegations of fraud, the Commission having alleged that the bank allowed one of its clients, hedge fund Paulson & Co, to package up the mortgages contained in ABACUS 2007-AC1, while at the same time betting that US residential property values would tumble.

According to the Commission, Fabrice Tourre, one of the bank’s vice presidents, was principally responsible for the CDO and Mr Tourre has since relocated to London, with Goldman omitting to advise the FSA that both the bank and its employee were involved in an SEC investigation.

The FSA’s penalty for the error is one of its largest to date, although it is unlikely to have much impact on the bank’s balance sheet, which accommodates larger sums in remuneration for top members of staff.


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