Goldman Subpoenaed By Manhattan DA In Relation To Credit Crisis

By Christina Rexrode and Rachel Beck

NEW YORK (AP) — Goldman Sachs Group Inc. was subpoenaed by the Manhattan District Attorney's office over the investment bank's activities leading up to the financial crisis, a person familiar with the matter told The Associated Press.

Shares of Goldman fell nearly 2 percent Thursday morning after Bloomberg News reported that the bank had been subpoenaed. A subpoena is a request for information and doesn't mean that a company has done anything wrong.

A spokeswoman for Manhattan District Attorney Cyrus Vance Jr. said the office had no update regarding Goldman. Goldman spokesman David Wells said the company doesn't comment on specific regulatory or legal issues, but cooperates fully when it receives a subpoena.

The subpoena follows the April release of a Senate report that showed Goldman had steered investors toward mortgage securities it knew would likely fail.

The report, which was done by a Senate panel investigating the financial crisis, found that Goldman marketed four sets of complex mortgage securities to banks and other investors. The report said the firm failed to tell the banks and investors that the securities were very risky, secretly bet against the investors' positions and deceived the investors about its own positions to shift risk from its balance sheet to investors'.

Sen. Carl Levin., D-Mich., who heads the panel, said at the time the report was released that he planned to convey findings to the Justice Department and the Securities and Exchange Commission for possible further investigation.

Sen. Levin's spokesman, Bryan Thomas, said the senator had no comment.

Comments

[thoughtmc00]

03:32 PM on 06/05/2011

I think the major problem with the investigate and prosecution aspects of our financial regulation is a lack of penalties for the individuals involved. Sure, I want Goldman to pay fines for any profits they reaped from fraud, but at the end of the day it is much more important that every single Goldman employee who knew about this fraud and did nothing goes to jail for a long time. It is more important that we put the fear of God into those who run our financial institutions than we punish the institutions themselves. We need to potential fraudsters to know that it isn't only Madoff who is going to go to jail, it is every major player that signed off on these deals while knowing that the firm was betting against them. It is about disclosure of risk and the firm's positions in connection with a transaction, and those who can be proven to have had knowledge of this should go to jail. Even if it's just one guy, he should go to jail. It will prove to the rest of the financial industry that you can't do this sort of thing or you will have your freedom taken away from you.

[PuSencer]

02:55 PM on 06/05/2011

subpoenaed? that's all? how about fined billions, then we'll be making a little progress.

[nenitaB]

09:25 AM on 06/05/2011

If fraud is true ; How sad ,how sad , you rob money from dad
punish them not easy it's hard
Get your sword with iron clad
won't do , how sad , how bad !

[PuSencer]

02:56 PM on 06/05/2011

i'm sorry, but that is just awful

[nenitaB]

01:31 AM on 06/06/2011

Hi PuSencer, If my words are awful , that 's okay .

if the context , for you i feel sorry

Thanks !

[Eileenla]

01:37 AM on 06/05/2011

As a former Smith Barney broker and ex-employee of Citigroup, I can attest to the fact that our corporate offices often bet against the best interests of our clients...duping us, their own employees, in the process. It is a sobering experience to learn that the company you work for has been cheerfully lying to you, telling you to do something you later find out violates everything you've been taught to believe you're working for, because it's more profitable for them to do wrong by the world than to do what they originally promised the people.

[By Dickens]

08:05 AM on 06/06/2011

I guess that's what happens when finance takes over operations. The MBA mantra "maximize shareholder price" makes any activity on the conforming side of "legal" justifiable (ethics is merely a distraction). If it's of questionable legality? Next step is to do a little risk analysis and see if the NPV is attractive enough to go for it. Hedging is simply like taking insurance on a blackjack table when the dealer's upcard is an ace...only take it if you feel your luck is about to run out. When you're gambling (and that's what the finance industry was/is doing) your in the role of a customer. The rub is your supposed to be serving customers. That's the real purpose of business; not share price manipulation/maximization.

[builderman55]

12:19 PM on 06/04/2011

Blankfein on a perp walk. The ultimate middle class fantasy..

[Red Russet]

01:16 AM on 06/04/2011

Poor Neil, how can he explain what he actually does to the average Congressional meathead whose only knowledge of hi-finance comes from figuring out his kids paper route money.

[cinmac]

06:46 PM on 06/05/2011

The average Congressional meathead knows how to take insider knowledge and make money on their investments with it. They know how to get free airfare,free tickets to sporting events, and take junkets to exotic places with their entire family and half of their friends tagging along at our expense. Theyknow how to get lots of "donations", which of course, never sway how they vote. And we keep electing them-so who is the meathead.

[equilange]

11:45 PM on 06/03/2011

Please start trying these men as the criminals they are.

[Red Russet]

01:18 AM on 06/04/2011

They would but who will ever turn that derivative muck into everyday English.

[By Dickens]

08:08 AM on 06/06/2011

That's on the "to do" list ... right behind translating legal contracts/

[GloriaY]

10:40 PM on 06/03/2011

No more investigations, hearings, or any other waste of taxpayer money on this exercise. We need indictments, convictions, and serious jail time for these criminals.

[irochfpst]

08:16 PM on 06/03/2011

will someone please move his office to a jail cell where he belongs?

[nenitaB]

08:28 AM on 06/05/2011

LOL ! If only that's possible !

[Lost Rights]

10:52 AM on 06/03/2011

Well, I am cautiously optomistic that after all this time, something may happen. At least there has been the full recognition of what Goldman did, and whether they it was illegal or not, they are exposed and no one can now deny it.
I wonder what the GOP and their Teapotty friends will say? I think the GOP will blame Obama.

[JBS]

06:37 PM on 06/06/2011

It will be too little, too late.

[VegasBabe]

08:46 AM on 06/03/2011

Blah blah blah....call me when we're actually DOING something FINALLY about these parasites that includes loss of jobs, assets and jail time! Madoff needs company. Until then, their still collecting millions and millions in salaries and compensation for theft, living large in luxury housing, while tent cities in the US seem here to stay.

[Donns]

08:08 AM on 06/03/2011

Hey, guys on Wall St!! I have an offer for you that you can't refuse. I will publicly state that I forced you to do what you did and take all blame. I want only a small payment of $10M but can be negoiated down to a lower figure. After that you can get back to screwing the taxpayers as usual.

[thoughtmc00]

03:26 PM on 06/05/2011

Can I get in on that?

[drawlogs]

07:59 AM on 06/03/2011

You can't help feeling, looking at the big news stories right now, that the bad guys are getting away with it....and hugely outnumber the good guys.
Despite massive evidence of hacking criminality, UK Government about to give go-ahead to big Murdoch takeover of BSkyB...
http://hat4uk.wordpress.com/2011/06/03/hackgate-day-138-race-against-time-as-hunt-gives-outline-approval-to-newscorps-bskyb-bid/

[Oxford Mom of 2]

07:07 AM on 06/03/2011

Way to Go, DA! Keep the heat on, and then some.

[SolarPowerGuy]

05:35 AM on 06/03/2011

Well, it's ABOUT TIME!