British regulator fines Goldman 20 million pounds: report

9th September 2010, Comments 0 comments

Britain's financial watchdog has hit Wall Street bank Goldman Sachs with a 20-million-pound (31-million-dollar, 24-million-euro) fine linked to US fraud charges, a report said Wednesday.

The Financial Services Authority (FSA) fined the banking giant for failing to disclose it was under investigation for fraud by the US financial watchdog earlier this year, the BBC reported, without citing its sources.

The news is the latest blow for the one of the world's best-known investment banks, after it paid 550 million dollars in July to settle the fraud charges brought by the US regulator, the Securities and Exchange Commission (SEC).

Twenty million pounds is one of the heaviest fines ever imposed by the FSA.

Britain's finance watchdog announced in April that it was launching a probe into Goldman that was linked to the charges brought by the SEC, which alleged fraud over the way the bank sold a subprime mortgage investment.

The FSA fine also relates to Goldman's failure to tell the British regulator that Fabrice Tourre, an executive linked to the investment product, was under investigation, said the British broadcaster.

This was relevant because Tourre transferred from the United States to London, and so had to be authorised by the FSA, according to the report.

The watchdog accused Goldman of lacking the necessary systems to keep it informed of investigations by other regulators, said the BBC. Goldman has admitted it made a mistake, added the report.

The FSA declined to comment. Goldman Sachs could not be reached for comment.

In its fraud charges, the SEC accused Goldman of allowing a prominent hedge fund -- Paulson & Co. Inc -- to put together a package of subprime mortgages that were sold to clients, but which Paulson was also betting against.

After agreeing to the settlement with the SEC, the investment bank admitted it had made a "mistake" and given "incomplete" information to clients.

Among clients of Goldman's controversial product were German commercial bank IKB and Britain's RBS.

The type of mortgage-backed securities sold by Goldman in the deal were a key contributor to the financial crisis that peaked in 2008 because many contained risky mortgages.

The trade, which took place during a massive mortgage meltdown in 2007 and as the country was about to fall into a brutal recession, was said to have cost investors around one billion dollars.

© 2010 AFP

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