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Goldman Sachs Receives Subpoena From Manhattan DA

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Goldman Sachs (NYSE: GS) has received a subpoena from the Manhattan district attorney relating to the bank's role in the financial crisis. The new inquiry comes on the heels of a 650-page Senate report from the Permanent Subcommittee on Investigations which indicated that Goldman Sachs had misled both clients and Congress about its trading in mortgage-linked securities.

The subpoena comes two weeks after Goldman attorneys met with the New York Attorney General's office for an "exploratory" meeting regarding the Senate report.

“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,” said a Goldman representative.

Goldman Sachs' CEO Lloyd Blankfein has been in the crosshairs since testifying before Congress, where he denied that the firm was betting against the residential mortgage market while at the same time selling clients mortgage-backed securities.

“We didn't have a massive short against the housing market,” Mr. Blankfein testified at a Congressional hearing in 2010. Essentially, this was untrue. The Congressional report noted the phrase “net short” appeared more than 3,400 times in Goldman documents related to the market for mortgage-linked securities.

The report also quoted a letter from Goldman to the SEC in which the firm wrote, “we maintained a net short sub-prime position and therefore stood to benefit from declining prices in the mortgage market.”

Posted-In: News Legal

 

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