Officials at the Securities and Exchange Commission are crowing over the fine levied on Goldman Sachs for allegedly defrauding investors in the 2007 Abacus CDO, saying the $550 million penalty is the largest ever handed down against a Wall Street firm.
However, $550 million is equal to only about two weeks’ worth of profit that Goldman enjoyed during the first quarter of this year, when it made $3.3 billion. In addition, news of the settlement sent Goldman stock up, raising its market cap (value of stock multiplied by number of shares issued) $3.3 billion in less than a day and a half. And don’t forget that as part of the 2008 bank bailout, the federal government gave Goldman Sachs $12.9 billion to settle its claims against AIG.
Goldman agreed to the penalty without admitting or denying any wrongdoing.
Of the $550 million, $300 million will go into the U.S. Treasury and $250 million will be given to the investors who lost money in the Abacus deal.
-Noel Brinkerhoff, David Wallechinsky