The Securities and Exchange Commission (SEC) has charged Goldman Sachs and one of its vice presidents for defrauding investors by misstating and omitting key facts about a synthetic CDO backed by subprime mortgages.

The SEC alleges that Goldman Sachs structured and marketed the synthetic CDO, the performance of which was based on subprime RMBS. The bank failed to disclose to investors vital information regarding the said CDO, specifically the role that a major hedge fund played in the portfolio selection process as well as the fact that the hedge fund had taken a short position against the CDO.

Subscribe Now

Access to a full range of industry content, analysis and expert commentary.

30-Day Free Trial

No credit card required. Access coverage of the securitization marketplace, including breaking news updated throughout the day.