The SEC today announced civil fraud charges against Goldman Sachs and VP Fabrice Tourre. The chargea allege that Goldman ripped off investors by allowing a client who bet against the housing market to pick the mortgage securities being sold to other investors who were also investing in the housing market.
“The product was new and complex but the deception and conflicts are old and simple,” SEC Enforcement Director Robert Khuzami said in a statement. “Goldman wrongly permitted a client that was betting against the mortgage market to heavily influence which mortgage securities to include in an investment portfolio, while telling other investors that the securities were selected by an independent, objective third party.”
Shares fell 11% on the news. And in other the news, the SEC sometimes actually regulates companies.