Goldman Sachs May Settle SEC Fraud Case

Goldman Sachs (GS) may soon settle its fraud case with the Securities and Exchange Commission, the New York Post reported on Thursday.

The Post, citing sources familiar with the matter, said Wall Street’s investment giant was mulling closing the fraud case with the U.S. regulator rather than endure a repeat of Tuesday’s 10-hour grilling.

“It’s almost a certainty that there will be a settlement,” the paper quoted a source as saying.

Another source told the Post the “SEC has an “unlimited supply of ammunition” in the form of e-mails and records that it could release, and Goldman officials would like to avoid having those documents fired back at them the way they were on Tuesday.”

The SEC on April 16 announced that it had sued the Wall Street giant on charges it defrauded customers in selling them investments tied to collateralised debt obligations that were designed to fail. The agency alleges that Goldman structured and marketed a CDO and then sold the package to clients, which would profit only if the bonds gained value, without telling them that John Paulson, a prominent hedge fund manager, had helped the bank assemble the mortgage securities investment while at the same time taking a short position against it.

Goldman has denied the allegations, releasing three consecutive statements rebutting the SEC’s points.

However, according to the Post, the growing view inside Goldman, the most profitable company in Wall Street history, is that the firm may not be able to afford going toe-to-toe with the SEC in the court of public opinion if the case were to head to trial.

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