Gasp Goldman Sachs stands accused of misleading investors not a crime

Goldman Sachs accused of misleading investors

A US Senate probe says Goldman Sachs misled investors selling mortgage-backed investments it knew would fail.

The Senate Permanent Subcommittee on Investigations has spent two years looking at the behaviour of Wall Street banks at the time of the credit crisis.

It said Goldman had also misled Congress in a testimony given in 2010.

A Goldman Sachs spokesman said the testimony given by its executives had been "truthful and accurate", and the bank took the issues raised seriously.

Complex deals

On Wednesday, the Senate subcommittee said it had found "a variety of troubling and sometimes abusive practices" by banks in 2007 as the credit crisis began.

The report said that Goldman marketed four sets of complex mortgage securities to banks and other investors, but failed to tell them the investments were very risky.

In addition, the report said the bank did not mention that it was itself betting that the investments' value would fall, indicating it sold products to clients it did not believe in backing itself.

Carl Levin, the Democrat who heads the subcommittee, told a press briefing that Goldman had "exploited" clients.

Goldman Sachs spokesman Michael DuVally said that while the company disagreed with many of the report's conclusions, "we take seriously the issues explored by the subcommittee".

"We recently issued the results of a comprehensive examination of our business standards and practices, and committed to making significant changes," Mr DuVally said.

Previous probe

Goldman has already paid $550m (£337m) - without admitting or denying wrongdoing - to settle civil fraud charges over similar accusations relating to a large deal known as Abacus.

http://www.bbc.co.uk/news/business-13077509