Goldman evades mortgage securities fraud case with $550 million fine

Goldman Sachs, the 139-year old institution accused by the US regulator of mortgage securities fraud, yesterday agreed to settle charges by paying a record $550 million fine in what may be a big let-off for the Wall Street bank that duped investors.

The US Securities and Exchange Commission (SEC) yesterday announced that Goldman, Sachs will pay $550 million and reform its business practices to settle SEC charges that Goldman misled investors in a sub-prime mortgage product just as the US housing market was starting to collapse.

In agreeing to the SEC's largest-ever penalty paid by a Wall Street firm, Goldman also acknowledged that its marketing materials for the subprime product contained incomplete information.

Critics say that by agreeing to let off Goldman with a mere $550 million fine equal to just two week of its earnings, the SEC and the US government have tarnished their image by letting off one of the perpetrators of the world's biggest financial crisis.

The $550 million is just 16 per cent of its first quarter earnings of $3.46 billion and 4 per cent of its $13.4-billion profit for 2009.

Analysts had expected that the SEC would seek $1 billion fine as well as ask Goldman's chairman and CEO Lloyd Blankfein to step down.