Goldman case exposes open secret on Wall Street

13:02, April 19, 2010      

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The Securities & Exchange Commission (SEC) charged Goldman Sachs with civil fraud for misleading investors about a financial product tied to subprime mortgages, according to news reports on Monday.

Wall Street Journal said in a report that the SEC's case against Goldman last Friday has told an open secret on Wall Street.

The SEC's case is not the only suit to raise its horizons. A fortnight ago, General Electric (GE) told a reporter that the SEC had required information about reassurances that its CEO Jeffrey Immelt made two years ago about GE's ability to refinance its debt.

In his recent memoir On the Brink, the former U.S. Treasury Secretary Henry Paulson said Immelt told him at the time that GE was having problems selling short-term debt.

GE said later that it was cooperating with the SEC and that its disclosures were accurate.

The SEC's case against Goldman is its biggest assault on a Wall Street firm in a matter stemming from the financial crisis, according to the New York Times.

Scholars in Georgetown University believe the Goldman suit has exposed the open secret that SEC is a strict patrol for the financial market. "The agency is more certain of its role as a tough watchdog for the markets," said a law professor Donald Langevoort.



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