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Goldman Sachs fined £17.5 million by FSA

As expected, the Financial Services Authority (FSA) has today revealed a £17.5 million fine for Goldman Sachs in relation to an investigation by the US authorities regarding the company's mortgage-backed securities. It is the initial investigation by the US authorities which caught the eye of the FSA because the company was allegedly warned up to 18 months prior to informing the FSA that it was being investigated by the SEC.

It was also the fact that one of the main employees at the centre of the mortgage securities operation was actually trading from London under the authority of the FSA. Those who recall the US investigation may remember the company was fined US$540 million after coming to an arrangement with the SEC in relation to the serious allegations. It was also revealed today that the fine from the FSA would have been £25 million if the company had not agreed to settle the case at the earliest stage.

In a complex matter the US authorities allege that Goldman Sachs was effectively involved with both sides of a mortgage security transaction and failed to disclose this to investors. Goldman Sachs is just one of many financial giants which have suffered damage to its reputation during and after the credit crunch.

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