With Goldman Sachs being charged by the US Securities and Exchange Commission for fraud in connection with the creation of complex financial products that were sold in the market. Shares of Goldman Sachs plunged more than 10 percent in just the first half-hour of trading after the suit was announced last Friday morning. They closed down 13 percent, at US$160.70, wiping away more than US$10 billion of the company’s market value. It is suspected that Goldman Sachs, despite knowing the flaw in the structured financial products that resulted investors to lose money, continued selling and marketing the product to the general public. Could Goldman Sachs' case be the tip of the iceberg, signalling the start of Wall Street's legal troubles stemming from the subprime meltdown? Other investment banks may be investigated to determine if they were also involved in creating similar products.
From tomorrow onwards and weeks to come, many companies will be releasing their quarterly financial results. This should add onto the already jittery stock market, especially the financial banks' sector.
S.E.C. Accuses Goldman of Fraud in Housing Deal [via]
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