Goldman Sachs has agreed to pay $550m to US regulators to settle civil fraud charges over how it marketed a sub-prime mortgage product, ending a probe that worried its clients and affected its share price.
The investment bank paid the largest settlement against a financial services firm with the Securities and Exchange Commission.
But many investors viewed the $550m as just a slap on the wrist for a bank that earned more than $13 billion last year.
The SEC accused Goldman of creating and marketing a debt product linked to sub-prime mortgages without telling investors that a prominent hedge fund helped choose the underlying securities and was betting against them.
Goldman acknowledged as part of the settlement that its marketing materials were incomplete. Of the $550m settlement, $250m will be returned to harmed investors, and $300m will go to the US Treasury. The settlement is subject to approval by a federal judge.
