Reply #15: Goldman paying $550M to settle civil fraud charges

[ozymandius]

WASHINGTON – Resolving a high-profile government case linked to the mortgage meltdown, Goldman Sachs & Co. has agreed to pay a record $550 million to settle civil fraud charges that it misled buyers of complex investments.

For Goldman, it was a chance to put behind it a case that had tarnished its reputation after it emerged relatively unscathed from the financial crisis. For the SEC, emerging from the embarrassment of a series of lapses, the charges and the settlement were a high-stakes opportunity to prove it could be tough on Wall Street.

The deal calls for Goldman to pay a $535 million fine and $15 million in restitution of fees it collected. Of the total $550 million, $300 million will go to the government and $250 million goes to compensate two European banks that lost money on their investments.

The penalty was said to be the largest against a Wall Street firm in SEC history. But the settlement amounts to less than 5 percent of Goldman's 2009 net income of $12.2 billion after payment of dividends to preferred shareholders — or a little more than two weeks of net income.

http://news.yahoo.com/s/ap/20100716/ap_on_bi_ge/us_sec_goldman