British watchdog to investigate Goldman Sachs
April 20th, 2010 - 7:53 pm ICT by IANS
London, April 20 (DPA) Britain’s financial watchdog said Tuesday it would launch a formal enforcement investigation into investment bank Goldman Sachs following fraud charges in the US.
The Financial Services Authority (FSA) said it would work closely with the Securities and Exchange Commission (SEC) in the US which has alleged that the bank defrauded investors during the sub-prime housing crisis. Goldman Sachs has strongly rejected the claims.
In Britain, Prime Minister Gordon Brown has called for a special investigation into Goldman Sachs and accused the bank of “moral bankruptcy”.
“If people knew they were deliberately selling products that were worthless, or likely to be worthless, that is a breach of any of the codes of trust that banking should uphold. This practice cannot be allowed to continue,” Brown said Tuesday. The government was “determined to root it out”, he said.
The SEC alleges Goldman, which employs 5,500 people in Britain, failed to disclose that one of its clients helped create - and then bet against - sub-prime mortgage securities that Goldman sold to investors.
It claimed investors - including the Royal Bank of Scotland - lost 650 million pounds ($1 billion) as a result of the alleged fraud.
Opposition parties in Britain have urged the government to suspend any cooperation with the bank while the investigations continue.
Goldman acted as an adviser to the government over the 2007 nationalisation of Britain’s mortgage lender Northern Rock from which a potential “fees bonanza” is expected in the event of privatisation.
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- Goldman Sachs Emails Highlight Importance Of Transparency, Says White House Economic Adviser - Apr 26, 2010
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