Friday, 25 July 2014
Last updated 4 hours ago
Apr 20 2010 | 1:20pm ET
Less than a week after U.S. regulators charged Goldman Sachs with fraud, the firm finds itself at the center of a series of international investigations.
Market regulators in Australia and Germany are considering probes of their own, and Britain’s Financial Services Authority has already launched a formal investigation. Goldman is accused of misleading investors in a collateralized debt obligation it structured for hedge fund Paulson & Co., which made millions shorting the CDO.
“Following preliminary investigations, the FSA has decided to commence a formal enforcement investigation into Goldman Sachs International in relation to recent SEC allegations,” the regulator said. “The FSA will be liaising closely with the SEC in this review.”
German regulators are also in touch with their Washington, D.C., counterparts. A spokeswoman for BaFin told Reuters that its “contact with the SEC has been intensified.”
On the other side of the world, the Australian Securities and Investment Commission is reportedly monitoring the Goldman situation and looking into whether the securities in question affected any Australian investors or firms.
The Goldman charges have figured prominently in the U.S. debate over financial regulation reform. The European Union is also getting in on the act, with the European Commission’s top official on markets saying the allegations demonstrate the need for international derivatives regulation.
A spokeswoman for Michel Barnier said in a statement that “the issues strengthen his belief and determination that Europe needs to act in the area of derivatives.”
The Goldman case has also taken center stage in the U.K.’s general election campaign. The third-party Liberal Democrats, echoing Barnier, said the charges show a need for a “complete overhaul” of the financial industry.
“The allegations about Goldman Sachs are yet another reminder of how reckless and greedy the global banking industry had become,” Nick Clegg, the party’s leader, said. “The great tragedy is that none of that recklessness or greed has yet been stamped out of the City of London, and it is costing jobs and businesses day by day.”
Both the LibDems and the opposition Conservative Party, widely tipped to emerge the largest party in Parliament after the May 6 poll, have called on the Labour government to suspend Goldman from working for Britain pending the completion of the FSA probe. But British Chanellor of the Exchequer Alistair Darling rejected those demands.
“I don’t think you can stop doing business with a firm because an individual is accused of doing something,” he told Bloomberg News.
Jul 8 2014 | 10:48am ET
The surge in derivatives regulation is among the most complex challenges facing the financial services industry today. Northern Trust’s Joshua Satten recently spoke with FINalternatives to share insights into the challenges presented by new regulation and explore how the industry is responding. Read more…