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Blankfein may face perjury as banks plan SEC settlement


Blankfein may face perjury as banks plan SEC settlement

Jorge Hernandez April 15, 2011

Lloyd Blankfein, the CEO of Goldman Sachs, and other employees of the bank may face charges of perjury concerning statements that they gave while under oath about the bank's involvement in the mortgage market crisis.

Banks such as JPMorgan Chase, Bank of America Merrill Lynch, Morgan Stanley, Citigroup and UBS will also likely pay individual settlements to the U.S. Securities and Exchange Commission (SEC) for their roles in selling mortgage bonds prior to the collapse of the housing market, according to Reuters.

The settlements dates will likely range from a few weeks to several months, with the SEC talking to each bank separately as opposed to making an overall deal with the industry. The decision for the regulatory commission to make individual settlements is due to each bank being up against different civil fraud charges.

On April 14, Senator Carl Levin of Michigan released a scathing report – the product of two-years worth of inquiry – condemning the actions of investment banks. The perjury charges, if they are levied against Blankfein, would mean that the executive and others lied under oath when they said that they were not aware that the collapse of securities would yield profits for the bank, according to Business Week.

Goldman and other financial institutions such as Deutsche Bank sold collateralized debt obligations (CDO) and the Levin-Coburn panel accuses them of being well aware that the CDOs were composed of risky subprime loans.

Goldman and Deutsche Bank had representatives that defended their actions.

“[T]here were divergent views within the bank about the U.S. housing market. Moreover, the bank’s views were fully communicated to the market through research reports, industry events, trading desk commentary and press coverage. Despite the bearish views held by some, Deutsche Bank …endured significant losses,” Michele Allison, a representative of the bank, told the news source.