Goldman Sachs settled with the Securities and Exchange Commission. That’s not a surprise. Goldman did not want to litigate this action. It wanted it to go away.
As a shareholder in Goldman, I wanted it to go away. It seems others did also. GS stock price opened at $138.50 on Thursday morning. It opened at $151.47 this morning. That’s a 10% increase based on the settlement. The stock has been down 21% since the SEC filed its complaint.
Goldman is going pay $550 million, with $250 million going to investors and $300 million going to the SEC. The dollar amount is not a surprise. I assumed the top dollar amount was the $1 billion lost by investors. I think the time it took between the filing of the action and the settlement was largely focused on how much Goldman was going to pay to make this ugly incident go away.
That is a big dollar amount. As SEC enforcement director Robert Khuzami points out, it’s the biggest SEC fine against a Wall Street firm. There have been bigger fines in other industries.
According to Footnoted, Goldman has $27 billion is cash and short term securities. It’s big dollar number, but Goldman can find that much the cash by looking under the cushions on its couch.
Unfortunately for Goldman VP Fabrice Tourre, he is not included in the settlement. The SEC is continuing its litigation against him. Fabulous Fab has a Monday deadline to respond to the SEC complaint. Fab still works at Goldman but is on paid leave.
He is trying to clear his name. Goldman just paid to get theirs back.
- SEC Litigation Release – Goldman Sachs to Pay $550 Million to Settle SEC Charges Related to Subprime Mortgage CDO
- Consent of Defendant Goldman, Sachs & Co.
- Goldman Sachs’ press Release on Settlement with the SEC
- A Closer Look at the Goldman Sachs SEC Enforcement Action Settlement by Kevin LaCroix in the D&O Diary
- The cost of doing business for Goldman Sachs … by Theo Francis for Footnoted
- But Who Won? Sizing Up Goldman’s Deal With the SEC by Ashby Jones in WSJ.com’s Law Blog