Our FT colleagues reported the news on Wednesday:
Goldman Sachs is facing a fine thought to be near £20m from the UK’s financial regulator following a five-month investigation into the investment bank’s international business initiated in the wake of fraud charges against the company in the US.
People familiar with the fine that will be levied on the bank by the FSA say that it is not based specifically on the Abacus transaction, but is the result of its investigation into the bank’s business practices in London sparked by the SEC allegations. …
The fine, which could be announced by the Financial Services Authority as early as Thursday morning, will deal a blow to Goldman’s efforts to put the high-profile case behind it following the bank’s settlement with the US Securities and Exchange Commission probe in July for $550m.
The FSA’s decision to launch its own inquiry, announced four days after the SEC case, was questioned by some legal experts at the time given that the Abacus deal was structured in the US. However, the SEC alleged that one of the biggest losers was IKB, the German bank.
Goldman declined to comment to the FT.
The BBC adds that the fine “is for failing to tell the FSA it was under investigation for fraud by the US financial watchdog this summer.”
Goldman’s stock had jumped along with the rest of the market early in the day, and there were also reheated reports that various private equity firms were attempting to hire away some its prop traders. But news of the fine broke at around 3pm, sending the bank’s stock lower in the last hour of trading:
The bank’s shares are down 12.6% on the year, and they are roughly 20% lower since April 16, when the SEC filed the Abacus complaint.
Related link:
Another prop desk folds, this time at Goldman – FT Alphaville
The case involving ABACUS 2007-AC1 – FT Alphaville