Goldman Sachs Said to Be Fined by U.K. Financial Regulator
Sept. 8 (Bloomberg) -- Charles Peabody, partner in charge of research at Portales Partners LLC, talks with Bloomberg's Julie Hyman and Mark Crumpton about the outlook for the principal-strategies group at Goldman Sachs Group Inc. KKR & Co. and Perella Weinberg Partners LP are in talks to hire members of Goldman's U.S. principal-strategies group, according to two people briefed on the negotiations. (Source: Bloomberg)
Goldman Sachs Group Inc., which agreed to pay $550 million in July to settle a U.S. regulator’s fraud lawsuit, will pay a separate fine to the U.K.’s Financial Services Authority, said a person briefed on the FSA’s decision.
The U.K. regulator found that Goldman Sachs failed to notify it about the U.S. Securities and Exchange Commission’s investigation of the New York-based firm’s Abacus transaction and of employee Fabrice Tourre’s role in it, according to the person, who spoke anonymously because the penalty hasn’t yet been made public.
The fine is less than 20 million pounds ($30.9 million) and may be announced as soon as today, the person said. FSA spokeswoman Cerris Tavinor declined to comment, as did Goldman Sachs spokesman Ed Canaday. The Financial Times reported the FSA’s plan yesterday.
The SEC sued Goldman Sachs and Tourre in April over claims the firm misled investors in collateralized debt obligations linked to subprime mortgages. Tourre, 31, the only Goldman Sachs executive sued individually, remains a defendant in the case after the firm settled. He has denied wrongdoing.
Goldman Sachs created and sold the CDOs in 2007, as the U.S. housing market faltered, without disclosing that hedge fund Paulson & Co. helped pick the underlying securities and bet against the investment vehicles, the SEC said in an April 16 lawsuit. CDOs are pools of assets such as mortgage bonds packed into new securities.
The settlement included a $300 million fine and $250 million in restitution for investors. The penalty is the largest ever levied by the SEC against a Wall Street firm, the agency said. Goldman Sachs, without admitting or denying wrongdoing, acknowledged it made a “mistake” and that marketing materials for the CDOs had “incomplete information,” the SEC said.
The FSA said in April that it would formally investigate Goldman Sachs related to the SEC’s claims.
Lorin Reisner an SEC lawyer, said in August that the regulator held “very preliminary” talks with Tourre about settling the claims against him.
To contact the reporter on this story: Christine Harper in New York at charper@bloomberg.net
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