SEC Clears Goldman Sachs in Subprime Mortgage Inquiry
Goldman Sachs has disclosed that it was cleared of wrongdoing after an investigation into a $1.3 billion subprime mortgage deal, a surprising victory for the bank.
The Securities and Exchange Commission’s decision to forgo action is an about-face for the federal regulator. In February, the SEC notified Goldman that it planned to pursue a civil enforcement action over the deal, a package of subprime mortgages in Fremont, Calif., that the bank sold to investors in 2006.
The SEC was examining whether Goldman misled investors into thinking the mortgage securities were a safe bet. At the time, Goldman said it would fight to convince regulators that they were mistaken.
On Monday, the bank learned that it was successful. Goldman was ”notified by the SEC staff that the investigation into this offering has been completed,” the bank said in a quarterly filing released Thursday, ”and that the staff does not intend to recommend any enforcement action.”
The announcement is the latest indication that federal investigations into the financial crisis are petering out as the deadline to file cases approaches. While the SEC has brought more than 100 financial crisis-related cases, including a major action against Goldman in 2010, the agency was aiming to take a final crack at punishing Wall Street for its role in the crisis.
After President Obama announced the creation of a special task force in January to investigate the residential mortgage mess, the SEC and other authorities vowed to hold the banks accountable. Wall Street packaged and sold subprime mortgages to investors, as well as the government-owned mortgage finance giants Fannie Mae and Freddie Mac, which suffered billions of dollars in losses.