Goldman Sachs and the Securities and Exchange Commission are discussing a possible settlement that would resolve the fraud lawsuit against Goldman and also end some probes of the financial firm's mortgage department, a published report said today.
The settlement plan was floated by Goldman which is "eager to end the bad publicity" it has encountered since the SEC sued it in April over a collateralized debt obligation, Abacus 2007-AC1, the Wall Street Journal reported. The SEC lawsuit claims Goldman created and sold a mortgage investment that was secretly intended to fail.
Some shareholders have been pushing Goldman to seek an all-in-one settlement and Goldman proposed the deal with the SEC as part of continuing discussions, sources familiar with the case said.
Goldman, which has denied that it used the Abacus 2007-AC1 to bet against the housing market, has remained steadfast in settlement talks with the SEC that it wants to avoid ending the case with a civil-fraud charge, the Journal said.
It's unclear if the SEC has responded yet to Goldman's offer --but it is unlikely the regulatory body would agree unless any deal would withstand critique from lawmakers and the public.
A deal for Goldman that would settle the Abacus lawsuit and stem further SEC probes into its mortgage department could also shield the firm from the release of information that could be used by investors in private litigation.