The Financial Crisis Inquiry Commission (FCIC) issued a subpoena to Goldman Sachs on Monday, June 7, requiring the firm to produce documents and witnesses it has failed to provide, in some cases since January, according to an announcement and timeline from the FCIC.
FCIC Chairman Phil Angelides and Vice Chairman Bill Thomas announced that Goldman Sachs was subpoenaed “for failing to comply with a request for documents and interviews in a timely manner.”
The FCIC is investigating the causes of the financial and economic crisis that still grips the U.S. and is to report its findings and recommendations to Congress in mid-December.
SEC Pressing Goldman Sachs
Goldman Sachs is already under pressure from an SEC civil suit that alleges fraud in the now-infamous ABACUS 2007-AC1 CDO deal. The underlying portfolio of securities that backed that synthetic collateralized debt obligation (CDO) was connected to the performance of residential subprime mortgage backed securities (RMBS). In that deal, Goldman Sachs originated mortgage-backed synthetic securities for two institutional buyers and also a customer that wanted to effectively sell short the mortgage market and profit from falling values of mortgage securities–allegedly without disclosing that the sell-side customer (hedge fund manager Paulson & Co.) helped select underlying mortgage securities that it believed would fall or default, benefiting Paulson–the short seller.
The SEC charged Goldman Sachs (GS&Co), and an employee, Fabrice Tourre, with fraud on April 16, “for making materially misleading statements and omissions in connection with a synthetic collateralized debt obligation (“CDO”) GS&Co structured and marketed to investors.” See “SEC Charges Goldman with Fraud.”
Goldman Sachs executives testified for 11 hours before a congressional investigation committee on April 27.