Further to my February 25 post on Goldman Sachs’ manipulation of the CDO market, The Numbers Racket… , the Securities and Exchange Commission (SEC) has filed fraud charges against Goldman Sachs for allegedly selling investors a financial product based on sub-prime mortgages that was secretly designed to lose value.
The SEC alleges that Goldman Sachs created and marketed a financial product known as a collateralized debt obligation, often referred to as a CDO, the value of which was linked to that of home loans. “The product was new and complex but the deception and conflicts are old and simple,” said Robert Khuzami, director of SEC’s Division of Enforcement. “Goldman wrongly permitted a client that was betting against the mortgage market to heavily influence which mortgage securities to include in an investment portfolio, while telling other investors that the securities were selected by an independent, objective third party.”
Source: The Washington Post