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07/02/2023
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Madoff & Goldman Sachs - Where was [is] the SEC?

The Securities and Exchange Commission is experiencing a crisis of public esteem, particularly for failing for more than a decade to bust confessed Ponzi-schemer Bernie Madoff and alleged Ponzi-schemer Alan Stanford. This week's $550 million settlement with Goldman Sachs over fraud charges notwithstanding, "Where was the SEC?" has a familiar ring.

altOne of the simpler and more effective things the SEC could do is adapt a new system of statistical incentives for agents to measure themselves against. Instead of encouraging field offices to take on a larger number of cases, the SEC should encourage them to take on more complex cases.

Jul. 14.─ Goldman Sachs Group Inc. and the Securities and Exchange Commission recently held discussions about a possible settlement to simultaneously resolve the fraud lawsuit against Goldman and some of the agency's lower-profile probes of the Wall Street firm's mortgage department, according to people familiar with the situation.

The settlement idea was floated by Goldman, which is eager to end the bad publicity swirling around the New York company ever since the SEC sued it in April over a collateralized debt obligation called Abacus 2007-AC1, these people said. Combining a settlement of the Abacus lawsuit with a resolution of related SEC probes could so the Goldman clients and investors, while shielding the firm from the release of information that could be used against Goldman in private litigation.

 

Some shareholders have been pushing Goldman to seek an all-in-one settlement, people familiar with the matter said. Goldman proposed the deal as part of continuing settlement discussions with the SEC. It isn't clear how the agency responded, but the SEC likely wouldn't agree to any broad settlement unless it was confident that the terms would withstand scrutiny from lawmakers and a federal judge who would have to approve the deal, according to people familiar with the SEC's position.

 

Another hurdle is how to structure a settlement that is narrow enough to satisfy Goldman, including by limiting its legal liability, but would allow the SEC to go after the company if the agency uncovers new evidence of wrongdoing related to the existing cases ...

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