Law.com……This post is an abbreviation of an article by Sue Reisinger.
The lawyers at the Securities and Exchange Commission went into negotiations seeking a record penalty, perhaps as high as $1 billion, according to Wall Street reports. It also wanted Goldman to plead guilty to at least one count of failure to disclose material information to investors in one of its subprime mortgage deals, sources said. In contrast, Goldman wanted to avoid any guilty plea. It also sought a global settlement that would end all SEC and criminal inquiries of any other subprime or other questionable transactions.
Instead of $1 billion, Goldman general counsel Gregory Palm agreed that Goldman would pay a total of $550 million — $15 million in disgorgement of profits and $535 million in civil penalties. Goldman won its fight to avoid a guilty plea in the settlement. The SEC backed down and allowed the company to “neither confirm nor deny” the charges in the settlement. That concession will certainly help the company as it faces a horde of shareholder and derivative suits. But the SEC added several qualifiers. For example, in future proceedings with the agency, Goldman cannot deny the allegations of fraud in the complaint.
Immediately after the settlement was announced, Goldman’s shares jumped 5 percent higher. That tells you who Wall Street thinks came out on top — the bankers. It is a stark lesson for the individual investing public, who lost some $750 million in the subprime deal and may or may not get a dime back from the government.
CLICK HERE to read the full article.