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U.K. regulator fines Goldman $31m

Goldman Sachs headquarters in Lower Manhattan in New York City.

TEXT OF INTERVIEW

BILL RADKE: Goldman Sachs has been fined following fraud allegations -- again. This time, it happened in the U.K. The British financial regulator has slapped a $31 million fine on the investment bank. Joining us live is Marketplace's London bureau chief Stephen Beard. Hello Stephen.

STEPHEN BEARD: Hello Bill.

RADKE: What's Goldman being fined for now?

BEARD: Well this is connected with a fraud case against Goldman in the U.S. earlier this year. You may recall the case -- the bank was accused of misleading its customers over complex mortgage-backed securities. They sold these securities without telling investors the securities had been selected by a hedge fund that was betting the securities would fail. Goldman paid out half-a-billion dollars, you may recall, to settle that case in the U.S.

RADKE: I do recall a half-billion fine for that here in the U.S., but a $31 million in the U.K.?

BEARD: Yes, well in fact the Brits are fining the bank for something different -- not for the fraud, but for failing to tell the British authorities that the bank was under investigation for fraud in the U.S. It's about disclosure. And it is a pretty serious rebuke here, I mean $31 million is a record fine for the British regulator. Goldman also possibly faces further trouble over this case from a different quarter, from investors. Here's Peter Thal Larson of the financial website Breakingviews.

PETER THAL LARSON: There is still the outstanding question of whether the investors who lost money on this transaction that Goldman arranged will seek compensation from Goldman Sachs.

And some of the biggest losers on that transaction are here in Europe. Among them are the Royal Bank of Scotland, now mostly owned by the British taxpayers and some German banks. Now if they do claim compensation, it's likely to be much more -- very much more -- than the $31 million. These investors lost hundreds of millions of dollars on that deal.

RADKE: OK Marketplace's London bureau chief Stephen Beard, thanks a lot.

BEARD: OK Bill.

About the author

Stephen Beard is the European bureau chief and provides daily coverage of Europe’s business and economic developments for the entire Marketplace portfolio.

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