UK Investigates Goldman Sachs

[Savonarola]

UK investigates Goldman Sachs 


Goldman Sachs described the fraud allegations
as "unfounded in law and fact" [AFP]


Britain's financial regulator has launched an investigation into Goldman Sachs after US authorities filed civil fraud charges against it.

The announcement on Tuesday came as the investment bank reported surging first-quarter earnings, almost double those of the same period last year.

Goldman said net income was $3.29 billion, bolstered by big gains in trading and debt and equity underwriting.

Goldman emerged as Wall Street's most influential bank after the financial crisis but has faced a backlash over its pay and business practices with the US Securities and Exchange Commission filing a civil fraud lawsuit against it on Friday.

The SEC is accusing the bank of misleading investors about risky mortgage investments as the US housing market began to falter in 2007.

The London-headquartered Goldman Sachs International, a principal subsidiary of Goldman Sachs Group Inc., pledged to co-operate with the British investigation following the US fraud charges which it again dismissed as "unfounded".

"We believe the SEC's charges are completely unfounded in law and fact, and look forward to co-operating with the FSA [Financial Services Authority]," the bank said in a statement.

FSA said it would liaise closely with the SEC.

Regulating banks

Peter Mandelson, the British business minister, said on BBC Radio: "We have got to look at the whole system of constituting and regulating banks.

"We need a system of regulation, a system of levying banks, which is internationally applied."

British interest in the case is likely to focus on the Royal Bank of Scotland (RBS), which paid $841 million to Goldman Sachs in 2007 to unwind its position in a fund acquired in the takeover of Dutch bank ABN Amro, according to the complaint filed in the US.

The government holds an 84 per cent stake in RBS, which nearly collapsed in large part because of its leadership of the consortium which took over the Dutch bank.

Fabrice Tourre, a Goldman Sachs vice-president who was named in the SEC lawsuit, was promoted and moved to the bank's London office to become executive director of Goldman Sachs International at the end of 2008.

The bank said on Tuesday that Tourre  is taking a break from his current position.

"It is voluntary. He decided to take some time off," Michael Duvally, a Goldman Sachs spokesman, said.

Government pressure

The British investigation follows pressure from Gordon Brown, the prime minister, who expressed shock over weekend reports that Goldman still intended to pay out several billion dollars in bonuses despite the US fraud charges.

The bank confirmed on Tuesday as it announced quarterly results in New York that it
set aside $5.5bn in the first three months of the year to pay employee salaries and bonuses, up 17 per cent from last year.

Brown talked about "moral bankruptcy", saying the activities of banks was "still an issue".

"They are a risk to the economy,'' he said. "We have got to make sure they behave in a proper way."

Brown is facing a parliamentary election in the coming weeks in which his handling of the economy and public anger over the actions of the banks are major issues.

So, will Brown offer them a moral bail out? 

[Faeelin]

Wait, a company that claims it innocent is acting as if it's innocent? That's outrageous!

I'm trying not to, but the way people are running screaming for blood is making me more suspicious than I would otherwise be.

[Scipio]

Example of the greater fool theory in action.  They should get a fucking medal.

[alfred russel]

Wait, a company that claims it innocent is acting as if it's innocent? That's outrageous!

I'm trying not to, but the way people are running screaming for blood is making me more suspicious than I would otherwise be.

You have just taken a big step on the path to becoming a corporate shill. 

[Grallon]

You have just taken a big step on the path to becoming a corporate shill. 

Isn't he already?   




G.

[alfred russel]

You have just taken a big step on the path to becoming a corporate shill. 

Isn't he already?   




G.

He is a law student--he is still in training.

[Grallon]

He is a law student--he is still in training.

I was referring to the mindset rather than the profession. 




G.