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[ 2010-05-09 ]

Goldman Sachs faces $1bn fine to draw line under fraud trial
London (UK) - 09 May 2010 – The Daily Telegraph - Moves to
reach a settlement to avoid a lengthy legal battle are at an
early stage but all the signs point to the SEC demanding a
high price to wind up the damaging case.

Goldman Sachs refused to comment on the prospects of a deal
with the SEC but reports circulating in the US suggest the
bank will be willing to pay a penalty on a lesser charge and
a recognition that there was no wrongdoing.


New chief executive Xavier Rolet faces challenges at the
London Stock Exchange
SFO freezes $100m of UK assets in Sir Allen Stanford fraud
investigation
Political chaos see pound take a tumbleAnalysts are more
conservative about the size of the potential penalties and
feel the SEC may be prepared to accept something more modest
in a range from $150m upwards.

The SEC has charged Goldman with misleading investors over
Abacus, a sub-prime mortgage financial vehicle. It alleges
Goldman kept investors in the dark about the $1bn mortgage
deal that saw the Royal Bank of Scotland emerge as one of
the biggest casualties with a loss of $840m.

Goldman is anxious to draw a line under an episode that has
been costly in terms of reputation and share price and made
the Wall Street giant the main scapegoat in the financial
crisis blame game.

Detailed evidence assembled by Goldman about the behaviour
of traders involved in the alleged fraud will be sent to the
SEC shortly as part of what is described as a robust
defence.

The SEC is said to be veering towards moving to an
out-of-court settlement but is determined not to "let
Goldman off lightly" because it would send the wrong signals
to markets, investors and politicians. Senior figures in the
Obama administration are also said to be ready to see an
accommodation. Tim Geithner, the Treasury Secretary, and the
Federal Reserve are reported to be in favour of a settlement
to allow the executive to focus on completing banking
reforms.

Goldman executives endured a stormy annual meeting on Friday
where faith-based funds and community activists maintained a
two-hour blitz on the bank's ethical behaviour.

Lloyd Blankfein, chairman and chief executive, admitted
there had been shortcomings and said a new business
standards committee is being set up to improve ethical
behaviour. It will be chaired by one of Goldman's
non-executive directors with Lee Scott, former chairman of
Wal-Mart and Lakshmi Mittal, who runs the giant
ArcelorMittal steel group, among the front runners to fill
the post

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