Goldman Sachs fined by FSA over Abacus subprime mortgage

September 9th, 2010 - this article is free to republish with open public license

The European financial watchdog hit Goldman Sachs with one of the largest fines ever levied in Brittan, The trouble began when Goldman’s Abacus mortgage found itself under the scruty of the SEC. Facing a probe for misconduct, Abascus was marketed heavily, and details of the litigation were not fully disclosed says FSA.

The recent happenings are a continuation of the fines which Goldman has had to pay due to the rogue fund, now totalling over a half billion dollars. That kind of impact worried investors and board members a like, the hope is that this latest round will be the last for Abascus.

French banker Fabrice Tourre promoted the shares in Europe, but denies allegations of any wrongdoing, claiming that he was mislead by marketing practices for the fund as well.

Shares of Goldman Sachs seemed to be unaffected by the news, as the bulk of financial penalties have already been assigned.

Reuters – Britain’s financial watchdog fined Goldman Sachs Group Inc 17. 5 million pounds ($27 million) for failing to tell the regulator that it was the subject of a U. S. probe, reviving disclosure headaches for the Wall Street powerhouse.

The fine — one of the biggest ever imposed in Britain — stemmed from Goldman’s troubled Abacus mortgage-security product, which was the focus of an investigation by the U. S. Securities and Exchange Commission.

But it was not the Abacus product itself that put Goldman at odds with Britain’s Financial Services Authority. Instead, it was the firm’s failure to inform the FSA that it was facing an SEC probe.

“Goldman Sachs International did not set out to hide anything, but its defective systems and controls meant that the level and quality of its communications with the FSA fell far below what we expect of an authorized firm,” FSA director Margaret Cole said in a statement on Thursday.


Date September 9, 2010