Goldman Sachs hit with record £357m fine

16 July 2010 0:00 am | Updated: 16 July 2010 8:17 am | By Natalie Holt

US regulator the Securities and Exchange Commission has fined Goldman Sachs a record £357m in a settlement agreed with the Wall Street bank over civil fraud charges of misleading its investors.

Royal Bank of Scotland, which lost about £545m in investments with Goldman Sachs, will receive just £65m in compensation.

The charges related to allegations that mortgage-backed securities sales were arranged by Goldman Sachs without the bank disclosing in its marketing material that hedge funds were betting against those same investments.

Under the terms of the settlement Goldman Sachs has neither admitted nor denied the SEC’s allegations.

But the bank does admit that some of its marketing material “contained incomplete information”, and also neglected to disclose the role of hedge fund Paulson & Co, headed up by John Paulson.

A statement from Goldman Sachs says: “We believe that this settlement is the right outcome for our firm, our shareholders and our clients.

“We understand that the SEC staff also has completed a review of a number of other Goldman Sachs mortgage-related collatarised debt obligation transactions and does not anticipate recommending any claims against Goldman Sachs or any of its employees with respect to those transactions based on the materials it has reviewed. We recognize that, as is always the case, the SEC has reserved the right to reopen those matters based on new information.”

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