Goldman Sachs Group Inc. is off the hook. The U.S. Department of Justice announced Thursday that it will not pursue criminal charges against Goldman or its employees related to accusations that the company bet against the same subprime mortgage securities that it was selling to its clients, which helped spur the national financial crisis. The agency started investigating the company in April 2011.
“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 DOJ said yesterday in a statement.
Critics, including Neil Barofsky, a former watchdog for the government’s financial system bailout in 2008, aren’t pleased with the news that Goldman won’t be punished for its possible role in the financial crisis. He told Thomson Reuters that “without such accountability, the unending parade of megabanks scandals will inevitably continue.”
In a related case, Goldman settled with the Securities and Exchange Commission (SEC) for $550 million in July 2010 without admitting to any wrongdoing. The SEC had claimed that Goldman failed to tell investors that the Paulson & Co. hedge fund helped choose and beg against the subprime mortgage-backed securities underlying an investment product called Abacus. The SEC is still pursuing a civil complaint against a Goldman executive who was involved in the Abacus deal.