Goldman 'faces US criminal inquiry'

Justice department investigates investment bank over mortgage deals, newspaper says.

    Lloyd Blankfein, Goldman's CEO, was questioned
    by a US senate subcommittee this week [AFP]

    "We would fully co-operate with any requests for information."

    The justice department's investigation reportedly stems from a referral from the SEC.

    Information about mortgage-related securities was said by the SEC to have been hidden by the bank in transactions in 2006 and 2007.

    'Investors misled'

    The SEC said that the firm misled investors by not telling them that the securities had been selected by Paulson and Co, a Goldman hedge fund client, who was betting that the investments would fail.

    Goldman and Fabrice Tourre, the trader said to be involved, deny the charges and have said that they will contest them in court.

    Lloyd Blackfein, the CEO, and other Goldman employees were also questioned by a US senate subcommittee in Washington DC over trading the mortgage-related products when the US housing market broke down in 2007.

    Congress is attempting to provide legislation to clean up and regulate the financial industry, after widespread criticism over banks' role in the global economic crisis.

    The panel accused Goldman of inflating the housing bubble in the past ten years and then profiting from its collapse in 2007, highlighting the alleged incidents that surrounding complex mortgage deals that brought the SEC charges.

    It also said the Wall Street giant helped to package toxic mortgages into bonds for fees from 2004 to 2007, and then repackaged those bonds into complex securities known as collateralised debt obligations, magnifying the risk from the mortgages.

    SOURCE: Agencies


    YOU MIGHT ALSO LIKE

    Interactive: Plundering Cambodia's forests

    Interactive: Plundering Cambodia's forests

    Meet the man on a mission to take down Cambodia's timber tycoons and expose a rampant illegal cross-border trade.

    The priceless racism of the Duke of Edinburgh

    The priceless racism of the Duke of Edinburgh

    Prince Philip has done the world an extraordinary service by exposing the racist hypocrisy of "Western civilisation".

    China will determine the future of Venezuela

    China will determine the future of Venezuela

    There are a number of reasons why Beijing continues to back Maduro's government despite suffering financial losses.