Goldman CDO Probe Goes Criminal

Apr 30 2010 | 12:41pm ET

In addition to civil fraud charges and a highly-publicized dressing-down on Capitol Hill, Goldman Sachs executives have another—potentially more serious—headache to deal with. Federal prosecutors in New York have launched a criminal investigation into Goldman’s structuring and marketing of a collateralized debt obligation that cost investors $1 billion.

For the time being, the criminal probe involves only the U.S. Attorney’s Office in Manhattan, and not the Federal Bureau of Investigation or other federal agencies. Criminal probes stemming from Securities and Exchange Commission charges are fairly common and do not always lead to criminal charges being filed.

The SEC on April 16 accused Goldman of misleading investors in a synthetic CDO, ABACUS-2007-AC1, that it structured and marketing for the hedge fund Paulson & Co. The Wall Street giant is accused of not telling investors that Paulson played a role in choosing the residential mortgage-backed securities that went into the CDO or that Paulson planned to bet against the CDO.

Goldman has denied any wrongdoing, and the firm’s top executives on Tuesday reiterated their belief that the firm did nothing wrong at a Senate committee hearing.


In Depth

FINalternatives Survey: We Asked Investment Pros...

Apr 2 2016 | 9:42pm ET

The data from our annual reader survey continues to roll in and provide interesting...

Lifestyle

Point72's Cohen Donates $275M To Veterans Mental Health Network

Apr 6 2016 | 8:31pm ET

Billionaire hedge fund manager Steve Cohen has formed a non-profit aimed at treating...

Guest Contributor

Agecroft: Why NYCERS Should Reconsider Exiting All Hedge Funds

Apr 18 2016 | 5:51pm ET

The recent decision by the New York City Employment Retirement System to exit its...