Goldman Sachs Fraud Allegations Affects Financial Markets

April 18th, 2010 Leave a comment Go to comments

Goldman Sachs Fraud Allegations Affects Currency and Financial Markets. Recently news broke that the SEC is accusing Goldman Sachs of fraud because of some of their positions in various subprime mortgage holdings.

Currently, Goldman Sach’s claims that the SEC’s charges are unfounded and untrue. The SEC maintains that the company misstated and misquoted information and mislead investors in certain subprime mortgage holdings.

The news of the fraud has negatively impacted the financial market. US Stocks in the S&P 500 fell 1.6% on the news. The Dow Jones Industrial fell 125.91 points upon the news, and closed barely over 11,000.

Last Monday, the Dow Jones closed over 11,000 for the first time since 2008 – and the alleged Goldman Sachs Fraud could potentially bring us back down below 11,00o once again. So much will depend on what transpires during the pending investigation.

The news couldn’t come at a worse time for the markets. With unemployment woes and potential banking reform around the corner, more fraud within financial institutions will only exacerbate the current situation.

As with many of the current problems, this started with the subprime mortgage market. Basically, the SEC is claiming that the firm didn’t disclose conflicts of interest dealing with certain investments.

The SEC claims that Goldman helped arrange various CDOs, and then bet against them without disclosing that to investors.

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