Goldman Sachs wheeling and dealing with SEC

By SUSANNE CRAIG, KARA SCANNELL And JOE BEL BRUNO
Wall Street Journal
Goldman Sachs Group Inc. has told the Securities and Exchange Commission that the company hopes to avoid a fraud charge as part of any settlement of last month's lawsuit against the securities firm, according to people familiar with the situation.

It isn't unusual for companies accused by the SEC to try to negotiate a lesser charge in settlement talks. While Goldman has repeatedly denied any wrongdoing, many analysts expect the company to agree to a fine and other penalties in order to resolve the suit, filed April 16 in U.S. District Court in New York.

Lawyers for Goldman have met with SEC representatives at least once since the suit was filed. It isn't clear how the SEC responded to indications from Goldman that the company hopes to reach a settlement tied to a lesser charge than fraud.

Goldman and the SEC declined to comment Thursday. People familiar with the preliminary settlement discussions have said no agreement is imminent.

Public-Relation's Value

Avoiding a fraud charge likely would help Goldman rebound from the public-relations and stock-price hits suffered since the lawsuit was filed. Such a settlement could trigger criticism of the SEC as having backed down from Wall Street's most profitable securities firm.

The lawsuit accuses Goldman and trader Fabrice Tourre of selling a collateralized debt obligation called Abacus 2007-AC1 without disclosing to the two other parties to the investment that hedge-fund firm Paulson & Co. helped to pick some of the underlying mortgage securities and was betting on the financial instrument's decline.

Goldman's interest in a settlement involving a lesser charge than fraud was earlier reported by the Financial Times.

Sanford C. Bernstein & Co. analyst Brad Hintz estimated Thursday that Goldman could wind up paying about $621 million to reach a settlement.

A $250 Million Fine?

Mr. Hintz said he believes the SEC would agree to a $250 million fine, based on previous settlements between the government and Wall Street. Goldman likely would have to redeem $371 million from investors who had money in the securities at the center of the SEC's lawsuit.

The overall estimated payment could trim Goldman's earnings by $1.05 a share, an amount that Mr. Hintz noted would be "painful to Goldman" but "allow both Goldman Sachs and the SEC to walk away declaring victory."

Analysts project Goldman will post a profit of $19.53 a share during 2010, according to Thomson Reuters.

Other analysts have projected it could cost more than $1 billion to settle the charges. "Certainly, Goldman wants this case settled," Mr. Hintz wrote.


JUST WRITE THE SEC A CHECK AND EVERYBODY WINS!!!!