Goldman Sachs Escapes Prosecution for its Role in Subprime Crisis
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The United States Justice Department has said it will not pursue criminal charges against Wall Street titan, Goldman Sachs, nor its employees, for its roles in the 2007/08 subprime mortgage crisis.
In a statement, the Justice Department said “the burden of proof” could not be met to prosecute Goldman Sachs criminally based on claims made in an extensive reported prepared by a US Senate panel that had investigated the bank for its role in selling toxic debt.
The United States Justice Department has said it will not pursue criminal charges against Wall Street titan, Goldman Sachs, nor its employees, for its roles in the 2007/08 subprime mortgage crisis.
In a statement, the Justice Department said “the burden of proof” could not be met to prosecute Goldman Sachs criminally based on claims made in an extensive reported prepared by a US Senate panel that had investigated the bank for its role in selling toxic debt.
However, the Justice Department reserves the right to prosecute the bank and its relevant employees should new evidence surface.
In April 2011, the US Senate Permanent Subcommittee on Investigations published a scathing report on the financial crisis and had targeted Goldman Sachs’ apparent culture of greed.
The investigation also alleged that Goldman had put its own interests ahead of its clients.
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According to Reuters, “the decision not to prosecute Goldman, a firm held up by critics as a symbol of Wall Street greed during the 2007-2009 financial crisis, highlights the difficulty in prosecuting crisis-related cases.”
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In a brief statement released on Thursday, Goldman said:
[quote] We are pleased that this matter is behind us. [/quote]
Law enforcement agencies have so far been unsuccessful in prosecuting the bank, nor its executives.
In 2010, Goldman Sachs agreed to pay a record $550 million to end the US Securities and Exchange Commission’s civil-fraud suit. Goldman, however, got away without admitting any wrongdoing.
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Separately, Goldman Sachs was notified Monday by SEC staff “that the investigation into this offering has been completed… and that the staff does not intend to recommend any enforcement action,” it said Thursday in a regulatory filing.
The US securities watchdog had notified Goldman in February that it was probing whether the bank had made the proper disclosures to investors about the $1.3 billion mortgage portfolio dating back to 2006.
Goldman may have escaped criminal prosecution, for now at least, but it continues to be dogged by criticism, including from its own ranks.
In March, a former Goldman employee publicly slammed the bank’s “toxic and destructive” culture, as well as lacking “moral fibre” in its business dealings.
