The Securities and Exchange Commission sent its allegations of civil fraud by Goldman Sachs for review by the the Justice Department, several sources tell NBCNewYork.com. But officials caution the review for any possible criminal wrongdoing is in the preliminary stage. Sources familiar with the case stress federal prosecutors have not yet determined if a full-blown criminal investigation is warranted.
The U.S. Attorney's office in Manhattan has been reviewing numerous allegations of misconduct by Goldman Sachs in the months before the SEC report was filed, nbcnewyork.com has learned. But officials caution the civil allegations against Goldman Sachs are complex and at this early stage, veteran investigators question if there is enough evidence for the Justice Department to proceed with any full blown investigation.
SEC spokesman John Nester declined to comment. It is office policy "to neither confirm nor deny the existence of an investigation," said US Attorney spokeswoman Yusill Scribner. FBI spokesman Rich Kolko also declined to comment. "We do not have an open matter on Goldman Sachs," said U.S. Postal Inspector Thomas Boyle.
The SEC has accused Goldman Sachs of lying to investors about the involvement of a hedge fund in the design of certain mortgage-backed securities. That hedge fund then bet against those securities. The fraud allegation: that Goldman Sachs failed to disclose the hedge fund's involvment to other investors who bought those securities.
Goldman Sachs denies any wrongdoing. In response to news the SEC had forwarded its findings to the Justice Department, Goldman Sachs spokesman Lucas van Praag said,"Given the recent focus on the firm we are not surprised by the report of an inquiry, and of course we would cooperate with any request for information."