The U.S. Department of Justice will not bring charges against investment bank Goldman Sachs Group Inc. (GS: Quote) or any of its employees for financial fraud related to the mortgage crisis, according to media reports on Thursday.
Ending a year-long probe, the Justice Department or DOJ reportedly said that the burden of proof to bring a criminal case "could not be met based on the law and facts as they exist at this time". However, the DOJ said its decision could change if new evidence were to emerge.
The DOJ's probe was looking into findings of a two-year inquiry on the financial crisis by the Senate Permanent Subcommittee on Investigations or PSI, which alleged that Goldman Sachs misled both its clients and Congress.
In its 650-page report, the Subcommittee chaired by Democratic Senator Carl Levin of Michigan had said that investment banks like Goldman Sachs deliberately took advantage at the expense of their clients and investors when it realized that the mortgage market was in decline.
Goldman Sachs had been under severe scrutiny from several government agencies since the financial crisis. The company was first blamed for its outsize pay packages while most of country was suffering from the crisis. In April 2010, the company had to pay $550 million to the Securities and Exchange Commission to settle a related civil fraud suit on subprime mortgages.
In 2011, Goldman Sachs' Chief Executive Officer Lloyd Blankfein reportedly hired Reid Weingarten, a high-profile Washington defense attorney, to defend him in connection with the DOJ's inquiry into officials of the company.
In a related civil case, Goldman had settled with the U.S. Securities and Exchange Commission or SEC for $550 million in July 2010, without admitting wrongdoing.
Separately on Thursday, Goldman Sachs said the SEC has dropped an investigation into the company's role in selling a different $1.3 billion of mortgage-backed securities.
Goldman Sachs, in late February, said it received a Wells notice from the SEC that was related to an offering underwritten by the company in late 2006 of about $1.3 billion in subprime residential mortgage-backed securities.
A Wells Notice is sent by the SEC to people or companies indicating that it is considering recommending a civil enforcement action against them. The notice provides the company or person with the chance to provide information as to why enforcement action should not be taken against them.
GS closed Friday's regular session at $103.02, down $0.58 or 0.56 percent on a volume of 3.12 million shares.
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by RTT Staff Writer
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