The embattled Wall Street bank Goldman Sachs is edging close to accepting lesser charges — possibly involving an admission of negligence — to settle a US$1 billion fraud prosecution laid by US regulators last month.
An admission of failings by the bank, albeit far short of those alleged by the US Securities and Exchange Commission (SEC), would mark a substantial retreat from Goldman’s defiant response to the regulator’s civil fraud lawsuit, which it continues to argue is wrong “in fact and in law”.
The SEC alleges that the bank misled investors over the controversial sale in 2007 of a US$1 billion derivative investment called Abacus tied to a package of mortgage loans.
The prospect of Goldman admitting to shortcomings comes only a week after Warren Buffett, whose Berkshire Hathaway group has a major stake in Goldman, dismissed the SEC’s charges as misguided. But the episode has left the bank struggling to protect its reputation.
Tentative talks about a deal are to continue this week after a meeting today between Goldman’s lawyer and the SEC that signaled the first chink in a previously cast-iron insistence by the bank that it would fight the allegations.
Some analysts have speculated that the total cost of a settlement could be as much as US$1 billion, making it one of the largest in US history. The Wall Street Journal last week reported that some executives and powerful alumni of Goldman are discussing whether the bank’s chairman, Lloyd Blankfein, should resign to restore confidence in the company.
While Goldman is adamantly refusing to accept any charge of fraud over its Abacus mortgage deal, it is anxious for a swift resolution of the case and is willing to countenance a more modest accusation, possibly along the lines of negligence or poor administrative processes.
Goldman is concerned about an ongoing avalanche of bad publicity and a slide in its stock, which has fallen by 22 percent since the SEC laid charges in the middle of last month. But the SEC is in less of a hurry, wary that if it backs down, it could face public and political hostility for weakness against an institution with powerful connections.
The SEC claims that Goldman misled investors in Abacus by failing to come clean about the role of a hedge fund, Paulson & Co, that was going “short” to bet on Abacus slumping in value. The security duly dived as US housing prices slumped, leaving Royal Bank of Scotland, which backstopped liabilities, with a bill of US$840 million.
The US Department of Justice is examining possible criminal charges against Goldman and, in Britain, the Financial Services Authority is looking into the deal. Any admission of failures in a potential civil settlement will have to be carefully worded if it is not to influence a criminal investigation. The bank has also faced a flurry of lawsuits from shareholders who claim they should have been told earlier of an SEC probe.
Yet in spite of the controversy, investors gave overwhelming backing to Blankfein at Friday’s annual meeting by re-electing him with 95 percent of the vote.
MORE VISITORS: The Tourism Administration said that it is seeing positive prospects in its efforts to expand the tourism market in North America and Europe Taiwan has been ranked as the cheapest place in the world to travel to this year, based on a list recommended by NerdWallet. The San Francisco-based personal finance company said that Taiwan topped the list of 16 nations it chose for budget travelers because US tourists do not need visas and travelers can easily have a good meal for less than US$10. A bus ride in Taipei costs just under US$0.50, while subway rides start at US$0.60, the firm said, adding that public transportation in Taiwan is easy to navigate. The firm also called Taiwan a “food lover’s paradise,” citing inexpensive breakfast stalls
TRADE: A mandatory declaration of origin for manufactured goods bound for the US is to take effect on May 7 to block China from exploiting Taiwan’s trade channels All products manufactured in Taiwan and exported to the US must include a signed declaration of origin starting on May 7, the Bureau of Foreign Trade announced yesterday. US President Donald Trump on April 2 imposed a 32 percent tariff on imports from Taiwan, but one week later announced a 90-day pause on its implementation. However, a universal 10 percent tariff was immediately applied to most imports from around the world. On April 12, the Trump administration further exempted computers, smartphones and semiconductors from the new tariffs. In response, President William Lai’s (賴清德) administration has introduced a series of countermeasures to support affected
CROSS-STRAIT: The vast majority of Taiwanese support maintaining the ‘status quo,’ while concern is rising about Beijing’s influence operations More than eight out of 10 Taiwanese reject Beijing’s “one country, two systems” framework for cross-strait relations, according to a survey released by the Mainland Affairs Council (MAC) on Thursday. The MAC’s latest quarterly survey found that 84.4 percent of respondents opposed Beijing’s “one country, two systems” formula for handling cross-strait relations — a figure consistent with past polling. Over the past three years, opposition to the framework has remained high, ranging from a low of 83.6 percent in April 2023 to a peak of 89.6 percent in April last year. In the most recent poll, 82.5 percent also rejected China’s
PLUGGING HOLES: The amendments would bring the legislation in line with systems found in other countries such as Japan and the US, Legislator Chen Kuan-ting said Democratic Progressive Party (DPP) Legislator Chen Kuan-ting (陳冠廷) has proposed amending national security legislation amid a spate of espionage cases. Potential gaps in security vetting procedures for personnel with access to sensitive information prompted him to propose the amendments, which would introduce changes to Article 14 of the Classified National Security Information Protection Act (國家機密保護法), Chen said yesterday. The proposal, which aims to enhance interagency vetting procedures and reduce the risk of classified information leaks, would establish a comprehensive security clearance system in Taiwan, he said. The amendment would require character and loyalty checks for civil servants and intelligence personnel prior to
RSS