17 Jul 2010

Goldman Sachs to pay $US550 million

9:02 am on 17 July 2010

Wall St investment bank Goldman Sachs is to pay a record $US550 million to settle fraud charges connected with the meltdown of the United States housing market.

The payment is part of a deal with the US Securities and Exchange Commission, which says it's the biggest fine for a bank in its history.

The charges concern Goldman's marketing of mortgage investments. The bank had been accused of failing to disclose that one of its hedge fund clients was betting against a mortgage-backed securities deal it was also helping put together.

Terms of the settlement are subject to approval by a federal judge.

If they are, the Royal Bank of Scotland will receive $US100 million compensation and Germany's IKB Deutsche Industriebank $US150 million, with the remainder going to the US Treasury.

The commission says Goldman has acknowledged that marketing material contained "incomplete information".

In a statement, Goldman does not admit legal wrongdoing but says the move was "the right outcome for our firm, our shareholders and our clients".