Goldman Sachs, which emerged relatively unscathed from the financial crisis, was accused of securities fraud in a civil suit filed Friday by the Securities and Exchange Commission, which claims the bank created and sold a mortgage investment that was secretly devised to fail.The assertion that the accusations are "completely unfounded in law and fact" is hilarious. As Matt Yglesias points out: "The general form of this complaint, that it was wrong for Goldman to make money by betting on the failure of debt-vehicles that in another context Goldman was marketing, has been around for a while." Being pissed that the SEC believes the law applies to you isn't the same as the case being unfounded in law. Sorry, fellas.
The move marks the first time that regulators have taken action against a Wall Street deal that helped investors capitalize on the collapse of the housing market. Goldman itself profited by betting against the very mortgage investments that it sold to its customers.
The suit also named Fabrice Tourre, a vice president at Goldman who helped create and sell the investment.
In a statement, Goldman called the S.E.C. accusations "completely unfounded in law and fact" and said the firm would "vigorously contest them and defend the firm and its reputation."
Also see: BTD.
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