The outcome was also an insult to the investors of Goldman's collateralised debt obligation (CDO) called 'Abacus', two of whom received a measly $250 million, while one of them lost nearly a billion dollars, critics  of the settlement aver.

On 17 April 2010, the SEC had filed a 22-page civil suit in a New York Court against Goldman Sachs and one of its employees Fabrice Tourre, accusing the bank of creating and marketing 'Abacus' that hinged on the performance of sub prime residential mortgage-backed securities (RMBS). (See: Goldman Sachs sued by US regulator for securities fraud)

The SEC accused the firm of not disclosing to investors vital information about the CDO, in particular the role played by one of the world's largest hedge funds, Paulson & Co, in the portfolio selection process, where it had taken a short position against the CDO.

Although Paulson has not been named as a defendant in the suit, the SEC alleged that Paulson paid Goldman $15 million to create junk sub prime residential mortgage-backed securities (RMBS) to enable it to take short positions against the RMBS.

Goldman, in turn then duped ACA Management, a third party with expertise in analysing credit risk, into saying that the RMBS were creditworthy so that Goldman could offload them on to unsuspecting clients.

By 24 October 2007, 83 per cent of the RMBS in the Abacus portfolio had been downgraded and 17 per cent were on negative watch and by 29 January 2008, 99 per cent of the portfolio had been downgraded.