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NEW YORK, April 16 (Reuters) – Goldman Sachs Group Inc was on Friday charged with fraud by the U.S. Securities and Exchange Commission in the structuring and marketing of a debt product tied to subprime mortgages.
The SEC alleged that Goldman structured and marketed a synthetic collateralized debt obligation that hinged on the performance of subprime residential mortgage-backed securities, and which cost investors more than $1 billion.
The following is reaction from industry analysts and investors:
MALCOLM POLLEY, CHIEF INVESTMENT OFFICER, STEWART CAPITAL ADVISORS, INDIANA, PENNSYLVANIA:
“People wonder how Goldman was able to make as much money in trading as they did at a time when nobody else was doing anything and maybe this is a reason why. How widespread this is, time will tell. If the SEC has brought charges on one instance my guess is it will open a can of worms.”
“Today, they (Goldman shares) are taking it in the shorts. Until you get some kind of view as to whether the SEC is onto something or Goldman Sachs is correct, my guess trading will be sloppy.”