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SEC split regarding Goldman Sachs prosecution

It has been revealed that US regulator, the Securities and Exchange Commission (SEC), was split 3-2 when voting on the possibility of prosecuting Goldman Sachs. Many investors believe this was the reason why the Goldman Sachs share price increased today with concern as to whether the prosecution has a firm base and is likely to succeed.

The $1 billion case is by far and away the largest and highest profile case brought against a US financial company and will grab the headlines for many months to come. The case would appear to revolve around a number of mortgage derivatives and a deal arranged by Goldman Sachs with allegations that the company was involved on both sides of the transaction but may not have informed both parties.

However, as we covered in one of our earlier articles, Goldman Sachs itself lost around $90 million on the transaction which could seem to weaken the case against the company. Whether the SEC is looking to make an example of Goldman Sachs and fire a warning shot at other financial companies is open to debate but there is no doubt this prosecution is controversial and a very brave move by the regulator.

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