This is a major victory for New York Attorney General Eric Schneiderman.
The U.S. Department of Justice has disclosed that the Goldman Sachs Group Inc., has now agreed to shell out $5.06 billion in settlement claims for having misled mortgage bond investors during the 2008 financial crisis.
This settlement, disclosed by Goldman earlier this year in January, stems from its conduct in packaging, securitization, marketing and selling mortgage backed securities during 2005-2007, said the Justice Department.
As a result of its conduct, investors lost billions of dollars in securities during this period, said the Justice Department.
The settlement includes a civil penalty component of $2.385 billion as well as $1.8 billion in other relief costs, which includes costs for distressed borrowers and funds for homeowners whose mortgages exceeded the value of their property.
More significantly, the Justice Department disclosed, through this settlement, the government’s ability to bring criminal charges against Goldman is preserved and does not release any individual(s) from further potential civil or criminal liability(ies).
In addition to this settlement, Goldman will now have to pay $875 million to resolve claims by the Illinois and NY attorney generals, the Federal Home Loan Banks of Chicago and Seattle and the National Credit Union Administration.
With this settlement, New York Attorney General Eric Schneiderman has made a major in-roads in investigating wrongdoings that preceded the financial crisis in the mortgage backed securities market.
Since 2012, Goldman Sachs has reached settlement with 5 major financial institutions including Bank of America ($16.6 billion), JPMorgan Chase & Co. ($13 billion), Morgan Stanley ($3.2 billion), and Citibank ($7 billion).
“We are pleased to put these legacy matters behind us,” read a statement from Goldman’s spokesman “Since the financial crisis, we have taken significant steps to strengthen our culture, reinforce our commitment to our clients, and ensure our governance processes are robust,”.
Furthermore, Goldman has acknowledged the findings of the Justice Department which described how the company had misled investors.
Categories: Economy & Finance, Regulations & Legal, Strategy, Uncategorized
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