Goldman Sachs Agrees to Pay Largest Bank Fine in History…and Makes it Back in a Day

Monday, July 19, 2010
Goldman Sachs headquarters

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
Goldman Settlement: Who Wins, Goldman or SEC? (by Michael Corkery, Wall Street Journal)
The Generals Who Ended Goldman’s War (by Loiise Story, New York Times)
Securities and Exchange Commission v. Goldman Sachs (U.S. District Court, Southern New York) (pdf)


Leave a comment