Sunday, June 5, 2011

Goldman Sachs is subpoenaed

NEW YORK - 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.

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 when it receives a subpoena. A subpoena is a request for information and doesn't mean that a company has done anything wrong.

"This is just another thorn in Goldman's side," said Peter Henning, a professor of law at Wayne State University in Detroit. The government's request for information from Goldman is the first stage of an investigation, he added.

The subpoena follows the April release of a 639-page Senate report that showed Goldman had steered investors toward mortgage securities it knew would likely fail.

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

Associated Press Jun. 3, 2011 12:00 AM

Goldman Sachs is subpoenaed

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