From an article from CNBC, Goldman Sachs has escaped criminal prosecution on some of its trades during the height of the financial crises, when GS was betting against subprime mortgage securities that were also being sold to their clients. The announcement to end the prosecution is deemed to be odd, as the DOJ rarely makes public statements:

"The department and investigative agencies ultimately concluded that the burden of proof to bring a criminal case could not be met based on the law and facts as they exist at this time," the Justice Department said in a statement late on Thursday.

GS has already settled $550 million with the SEC in 2010, but others in the congress/senate are reluctant to find such plea bargains as an adequate punishment:

"Without such accountability, the unending parade of megabanks scandals will inevitably continue," said Barofsky, who has been an outspoken critic of the government's response to the financial crisis.

With the seemingly endless scandals that are surfacing these days, criminal prosecution would be a better deterrent of future fraud, which makes any wrongdoings official. Settlements disarms aggrieved investors of a weapon which they might have used in future lawsuits.

According to Dealbook:

...companies are now frequently offered so-called deferred prosecution agreements in which they pay a fine and agree to government oversight instead of facing criminal prosecution.

After an "exhaustive" review by the DOJ, I'm confused as to the lack of evidence when internal memos, data and e-mails are readily available to them. Is this case still relevant to prosecute? Does the $550 settlement with the SEC have any influence on the outcome? The SEC is known to have many shortcomings but it seems as though the DOJ isn't much different, at least in this case. I'm not out to get GS, but financial institutions needs to be accountable in order for investors to have confidence in the market, which is oh-so lacking these days.

What do you think? Should the DOJ/SEC accept "deferred prosecution agreements" and move on or are criminal charges necessary?

Comments (2)


Money and power trumps all. Google gets sued left and right for privacy violation and taking "illegal" info but in the end they pay a small fine and move on. Everyone understands that if you set a precedent and hit them hard to take them outta of business the market will be in turmoil over any investigation by DoJ, FTC, etc in the future. And the US clearly don't want businesses to be running to foreign countries. That's just my 2 cents, feel free to disagree.


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