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FSA starts Goldman Sachs' investigation

Published on 19 Apr 2010 under category: legal

An investigation by the financial services watchdog has begun into allegations of fraud at Goldman Sachs.

The Financial Services Authority (FSA) began the investigation following complaints from the US Securities and Exchange Commission and the filing of a $1 billion (£0.65 billion) lawsuit against the bank.

Goldman Sachs' employee Fabrice Tourre, 31, has been accused of misleading investors about the value of a mortgages package known as a "collateralised debt obligation" (CDO).

CDOs deliver high-risk returns to investors, by packaging together sub-prime mortgages.

Tourre is accused of structuring the investment on behalf of a US hedge fund, resulting in a $1 billion profit for the latter.

The organisation issued a statement today (April 19th) rebutting the allegations of fraud.

"Goldman Sachs, itself, lost more than $90 million. Our fee was $15 million. We were subject to losses and we did not structure a portfolio that was designed to lose money," it claimed.

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