When the rumors started spreading late this afternoon that the S.E.C.’s 4:45 p.m. “significant” announcement might have something to do with the Goldman Sachs suit, it was easy to be skeptical: There has been word since early May that the firm would be settling any day now. But according to Dealbook, CNBC and now an official press release from the government, Goldman Sachs has actually settled the S.E.C.’s bombshell lawsuit.
Goldman, which did not admit any wrongdoing, is paying $550 million. The fine had been predicted to run as high as $5 billion, nearly ten times more.
“Half a billion dollars is the largest penalty ever assessed against a financial services firm in the history of the SEC,” the director of its Division of Enforcement, Robert Khuzami, said in the press release. “This settlement is a stark lesson to Wall Street firms that no product is too complex, and no investor too sophisticated, to avoid a heavy price if a firm violates the fundamental principles of honest treatment and fair dealing.”
“Goldman is engaging in a broad-based review and a self-assessment,” he said in the press conference. “The entirety of the package makes it a very compelling settlement.”
“We believe that this settlement is the right outcome for our firm, our shareholders and our clients,” a statement from Goldman Sachs says. “We understand that the SEC staff also has completed a review of a number of other Goldman Sachs mortgage-related CDO transactions and does not anticipate recommending any claims against Goldman Sachs or any of its employees with respect to those transactions based on the materials it has reviewed.”
After the suit was filed in April, several firm executives, including C.E.O. Lloyd Blankfein, faced an extraordinary Senate hearing. Senator Mark Pryor asked four of the Goldman witnesses if their personal actions had contributed to the financial downturn. “Regret, to me, means something you feel you did wrong,” former mortgage department head Dan Sparks said then. “And I don’t have that.”