Goldman to Pay $550 Million to Settle SEC Suit

Thursday, July 15, 2010

Goldman Sachs has reached a settlement with the Securities and Exchange Commission over charges it misled buyers of mortgage-related investments.

Goldman will pay $300 million to the SEC to settle civil fraud charges, and another quarter-billion dollars to investors who lost money in the 2007 deal.

The settlement also requires Goldman to review how it sells complex financial investments.

Goldman has acknowledged in a court filing that its marketing materials omitted key information buyers should have known about the financial products they were buying . . .  namely, that a hedge fund had helped craft the investments so they would fail.

The hedge fund, Paulson & Company, made money betting against the investments, while Goldman's customers lost close a billion dollars in the deal.

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