Charges seem to be mounting against Goldman Sachs reports one of the payday advance lenders. Goldman Sachs accused of defrauding investors with selling securities tied to subprime mortgages. Recently the Securities and Exchange Commission (SEC) charged Goldman Sachs with civil fraud regarding the alleged ties to the subprime mortgage collapse. The civil charge alleges that John Paulson (Paulson & Co.) worked with Goldman Sachs to hedge funds in order to “bet” on the subprime mortgage collapse, with the 2016 sale of “collateralized debt obligation” (CDO). Goldman Sachs allegedly did not disclose conflicts in the CDO’s, and were betting on the fact that their value would plummet. When the CDO’s value finally crashed John Paulson stood to make approximately $1 billion off of the crash.
Currently the SEC’s charges are only one part of Goldman Sachs mounting legal woes. Last week Federal Prosecutors began a criminal investigation into Goldman Sachs and its employees regarding their alleged securities fraud. Other legal actions against Goldman Sachs and its employees seem to be mounting as well, including the demand of an investigation from UK Prime Minister. On a State level, Richard Blumenthal (Attorney General, Connecticut) stated that he will be looking into the SEC’s charges, which may lead to a formal state investigation. There are also mounting cases from individual investors who claim that Goldman was not transparent with information about “Abacus”, the mortgage security which is currently under investigation by the SEC.
There are some recent news reports which claim that our senators need to dig a little deeper to find the true culprits behind the subprime mortgage collapse, alleging that those responsible may not be (only) Goldman Sachs.