The SEC’s fraud charge against Goldman was always going to end in a settlement. Now it seems Goldman is also trying to take care of all the other SEC probes into its behaviour at the same time.
No matter how big a check Goldman has to write, this is smart. From the perspective of the firm, clients, and shareholders, the sooner Goldman disappears from the headlines, the better.
One hurdle to a global settlement is striking a mutually acceptable balance between limiting Goldman’s future liability (the only reason to enter a settlement like this) and allowing the SEC to hammer the firm for any future perceived wrongdoing it discovers. That one will be tough to agree on, which may make a global settlement unlikely.
Goldman Sachs Group Inc. and the Securities and Exchange Commission recently held discussions about a possible settlement to simultaneously resolve the fraud lawsuit against Goldman and some of the agency’s lower-profile probes of the Wall Street firm’s mortgage department, according to people familiar with the situation.
The settlement idea was floated by Goldman, which is eager to end the bad publicity swirling around the New York company ever since the SEC sued it in April over a collateralized debt obligation called Abacus 2007-AC1, these people said. Combining a settlement of the Abacus lawsuit with a resolution of related SEC probes could soothe Goldman clients and investors, while shielding the firm from the release of information that could be used against Goldman in private litigation.