A criminal probe for Goldman Sachs

Goldman Sachs CEO Lloyd Blankfein testifies before a Senate investigative committee on Capitol Hill

TEXT OF STORY

Bob Moon: Things just went from bad to worse for Goldman Sachs. There are reports this morning that federal prosecutors are aiming a criminal investigation at the big investment bank. The probe by the U.S. attorney's office in Manhattan is described as preliminary at this point. Marketplace's Nancy Marshall Genzer has the latest:


Nancy Marshall Genzer: News of the investigation comes just days after Goldman executives testified at a congressional hearing. The Wall Street Journal first reported news of the criminal investigation. The Journal says New York prosecutors began their probe after a referral from the Securities and Exchange Commission.

The SEC has filed a civil case against Goldman. It accuses the investment bank of defrauding investors. Civil cases are easier to prove than criminal ones.

Alistar Milne is an economist at City University, London. He says the criminal case will be even more difficult because the financial products Goldman sells are very complex.

Alistar Milne: I think it could be very hard to establish that they were actually exploiting customers. They'll always say it was just very complicated and we were just managing our risks.

Goldman says it'll cooperate fully with the investigation. A Goldman spokesman told the AP that, quote, "Given the recent focus on the firm, we're not surprised by the report of an inquiry."

In Washington, I'm Nancy Marshall Genzer for Marketplace.

About the author

Nancy Marshall-Genzer is a senior reporter for Marketplace based in Washington, D.C. covering daily news.

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