(Reuters) - The U.S. federal authorities are conducting a criminal probe into trading by Goldman Sachs, the Wall Street Journal reported on its website on Thursday without giving any more detail.
(Bloomberg) – Federal prosecutors in New York have been examining transactions by Goldman Sachs Group Inc., accused of fraud by U.S. securities regulators, to determine whether to pursue a criminal case, according to two people familiar with the matter.
The federal review, which lawyers say is common in such a high-profile case, is being done by the U.S. attorney in Manhattan, said the people, who weren’t authorized to comment and spoke on condition of anonymity.
The Securities and Exchange Commission filed a civil lawsuit against Goldman Sachs on April 16 alleging fraud tied to collateralized debt obligations that contributed to the worst financial crisis since the Great Depression. The burden of proof in a criminal case would be higher than in the SEC’s civil case. Criminal allegations have to be proven beyond a reasonable doubt.
Based on public reports about the SEC matter, a criminal case may be difficult, said Douglas R. Jensen, an attorney with Park & Jensen LLP in New York. The case appears “highly complex” and Goldman Sachs would be able to make multiple arguments in its defense, he said in an interview.
“In order to proceed criminally in a case, you need to have very clear evidence of lying, cheating and stealing,” said Jensen, a former deputy chief of the criminal division of the U.S. attorney’s office in the Southern District of New York who served on that office’s securities fraud task force.
‘Higher Profile’ Cases
The U.S. attorney’s office in the Southern District “pretty consistently” reviews SEC cases that are “higher profile” such as those involving large dollar amounts or policy issues, he said. The reviews may begin before the SEC files a lawsuit.
Yusill Scribner, a spokeswoman for U.S. Attorney Preet Bharara, declined to comment. Samuel Robinson, a Goldman Sachs spokesman, also declined to comment.
Goldman Sachs Chief Executive Officer Lloyd Blankfein said in an interview with CBS News this week: “It is my belief that nothing unethical and nothing illegal has happened, but I will tell you if I discovered something like this, or any senior person at Goldman Sachs discovered illegal or unethical behavior, we would eliminate that from the firm.”
The Federal Bureau of Investigation hasn’t opened a criminal investigation, said a U.S. official who spoke on condition of anonymity and wasn’t authorized to comment publicly on the matter. The Postal Inspection Service, which also could investigate such cases, doesn’t have any open probes into Goldman, said Tom Boyle, a spokesman for the agency in New York.
