U.K. fines Goldman $27 million in 'Fab' case

By Aaron Smith, staff writer


NEW YORK (CNNMoney.com) -- Britain's Financial Services Authority said Thursday it has fined Goldman Sachs International nearly $27 million for not disclosing its investigation by the U.S. Securities and Exchange Commission.

The regulatory agency said Goldman should have revealed that it was under investigation by the SEC for the allegedly fraudulent activity of Fabrice Tourre, a London-based Goldman trader.

The FSA said the fine of £17.5 million stems from Goldman's "failure to notify the FSA of matters related to the [SEC] investigation into the Abacus 2007-AC1 synthetic collateralized debt obligation."

An SEC lawsuit accused Tourre of selling the "Abacus" portfolio of real estate investments in 2007 that had a high likelihood of losing value because it was selected by Paulson & Co., a hedge fund that was betting it would fail. The SEC says that Tourre concealed Paulson's role from investors, who lost $1 billion on the deal.

Tourre has denied the allegations, which included the SEC's reference to a 2007 e-mail in which the trader said that he knew of his firm's corrosive investments and boasted of his Wall Street prowess, referring to himself as the "fabulous Fab."

The FSA said Goldman should have been forthcoming about the U.S.-based investigation.

"GSI did not set out to hide anything, but its defective systems and controls meant that the level and quality of its communications with the FSA fell far below what we expect of an authorized firm," said Margaret Cole, managing director of enforcement and financial crime for the FSA.

"We've agreed to the fine," said Goldman spokesman Mike DuVally. "We're pleased this matter has been resolved." He said the firm would not admit or deny the U.K. charges.

The FSA fine is in addition to a $550 million settlement with the SEC for allegedly misleading investors. Goldman agreed to the U.S. fine in July without admitting or denying the charges against it. To top of page

Frontline troops push for solar energy
The U.S. Marines are testing renewable energy technologies like solar to reduce costs and casualties associated with fossil fuels. Play
25 Best Places to find rich singles
Looking for Mr. or Ms. Moneybags? Hunt down the perfect mate in these wealthy cities, which are brimming with unattached professionals. More
Fun festivals: Twins to mustard to pirates!
You'll see double in Twinsburg, Ohio, and Ketchup lovers should beware in Middleton, WI. Here's some of the best and strangest town festivals. Play
Overnight Avg Rate Latest Change Last Week
30 yr fixed3.82%3.84%
15 yr fixed2.96%2.94%
5/1 ARM3.25%3.31%
30 yr refi3.82%3.85%
15 yr refi3.02%3.02%
Rate data provided
by Bankrate.com
View rates in your area
 
Find personalized rates:
Index Last Change % Change
Dow 17,416.85 225.48 1.31%
Nasdaq 4,683.41 45.41 0.98%
S&P 500 2,021.25 19.09 0.95%
Treasuries 1.75 0.03 1.57%
Data as of 7:06am ET
Company Price Change % Change
Pfizer Inc 31.83 -0.12 -0.38%
Yahoo! Inc 43.73 -3.06 -6.59%
Altria Group Inc 54.39 0.38 0.70%
Baxter International... 71.38 1.22 1.74%
International Paper ... 53.51 0.35 0.66%
Data as of Jan 29

Sections

Shake Shack is a huge success in New York. But will the 'fine casual' burger and fries joint be a big hit with investors too? It looks like Wall Street has worked up its appetite for the Shake Shack IPO. More

The Wednesday announcement that Don Thompson will retire as CEO of McDonald's leaves just two black CEOs in the elite Dow 30. More

Google reported a quarterly profit on Thursday that rose from a year ago, but the company fell short of Wall Street's expectations. More

On demand delivery startup WunWun is expecting its order volume to double by the time they close up shop on Monday. All thanks to a blizzard. More

The IRS said it has carried out thousands of audits of offshore schemes and pursued criminal charges that have resulted in "billions of dollars in criminal fines and restitutions." And it won't stop there. More

Most stock quote data provided by BATS. Market indices are shown in real time, except for the DJIA, which is delayed by two minutes. All times are ET. Disclaimer.

Morningstar: © 2015 Morningstar, Inc. All Rights Reserved.

Factset: FactSet Research Systems Inc. 2015. All rights reserved.

Chicago Mercantile Association: Certain market data is the property of Chicago Mercantile Exchange Inc. and its licensors. All rights reserved.

Dow Jones: The Dow Jones branded indices are proprietary to and are calculated, distributed and marketed by DJI Opco, a subsidiary of S&P Dow Jones Indices LLC and have been licensed for use to S&P Opco, LLC and CNN. Standard & Poor's and S&P are registered trademarks of Standard & Poor’s Financial Services LLC and Dow Jones is a registered trademark of Dow Jones Trademark Holdings LLC. All content of the Dow Jones branded indices © S&P Dow Jones Indices LLC 2015 and/or its affiliates.