Goldman “Blindsided” by SEC Suit

Monday, 19 April 2010 | by Pat's Picks

Goldman Sachs says it was “blindsided” by the SEC’s civil fraud lawsuit, which was filed late on Friday against the investment firm and one of its employees. Goldman officials say they knew they were being investigated by regulators about their involvement in the mortgage-backed securities trade but that typically, the SEC allows firms to settle out of court. Not this time. The Wall Street Journal says the case “could become the signature lawsuit from the financial-crisis era.”

Not surprisingly, an editorial in the Journal calls the the case “political” and describes it as “hindsight bias.”

The New York Times has an interesting take on the politics behind the timing of the SEC’s actions. The paper says Americans already have suspicions that the Wall Street game is rigged in favor of the banks. And that’s why Democrats are now increasingly confident that they have a better argument for justifying tighter financial regulations in an election year.

SOURCE: Wall Street Journal