France to Examine whether Goldman Sachs Defrauded Investors

Reuters reports that France could become the latest country to examine whether Goldman Sachs Group (GS) defrauded investors by failing to disclose conflicts of interest in mortgage investments it sold as the housing market was collapsing. The co. is accused of failing to reveal that prominent hedge fund manager John Paulson bet against a Goldman subprime mortgage securities debt product that he helped design. The SEC said the fraud was orchestrated in 2007.

Goldman Sachs has denied the allegations. In a statement, it called the SEC’s civil charges “completely unfounded in law and fact” and said it will contest them.

Despite Goldman’s insistence France’s economy Minister Christine Lagarde said on Wednesday that “the accusations warrant a full probe by French regulators.” Regulator AMF (Autorite des Marches Financiers), France’s financial markets watchdog, said earlier this week that it planned to co-operate with the SEC over the Goldman case if necessary, adding on Wednesday that it aimed to publish an update on the probe next week.

France is the latest, after Germany and Britain, to consider a Goldman probe.

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