Long-Time Coming? Goldman Hit With Subpoena
According to a report in Bloomberg News, this morning Goldman Sachs (NYSE:GS) was officially handed a subpoena by the Manhattan District Attorney’s Office, “seeking information on the firm’s activities leading into the credit crisis.” Goldman Sachs, the fifth largest bank in the U.S. in terms of assets, is in hot-water following accusations from Senate sub-committee chair Mark Levin that the firm knowingly mislead the Congressional Panel and its clients on investments and trading activities in mortgage related-securities tied to the housing market, contributing to the financial meltdown in 2008. Goldman (NYSE:GS) execs such as CEO Lloyd Blankfein and others who testified before Congress last year could face perjury charges if the accusations are proven to be veritable in further hearings.
Speaking on behalf of leading investment bank, David Wells commented on pending legal troubles, saying, “We don’t comment on specific regulatory or legal issues, but subpoenas are a normal part of the information request process and, of course, when we receive them we cooperate fully.” Spokespeople from the Manhattan DAs office also declined to provide further comments on the pending investigation.
More from Bloomberg, “Goldman Sachs (NYSE:GS) has slid 17 percent in New York Stock Exchange composite trading since the Senate subcommittee, led by Michigan Democrat Carl M. Levin, used the firm as a case study in a 640-page report on its findings released in April. At the time, Levin also said Goldman Sachs had misled Congress about the company’s bets on the housing market. The firm has said its testimony was truthful.”
The Levin-Coburn Senate Panel singled out Goldman Sachs (NYSE:GS) and Deutsche Bank AG (NYSE:DB) as potential culprits in contributing to the housing collapse, accusing the investment banks of “peddling collateralized debt obligations backed by risky loans that the banks’ own traders believed were likely to lose value.”
The market has not responded positively to this news, with Goldman (NYSE:GS) shares down -1.4% on the day after shedding over 2.3% in trading yesterday.