The $550 million settlement reached between Goldman Sachs and the Securities and Exchange Commission last month was not the end of investigations into the bank's murky Abacus portfolio.
Two more regulating bodies, the U.S.-based Financial Industry Regulatory Authority (FINRA) and UK-based Financial Services Authority (FSA), are still probing into the bank's failure to disclose to its investors a Wells notice that the SEC had handed it in early 2009-- an entire year before the SEC's lawsuit in April 2010.
News of the ongoing investigations was revealed in the bank's regulatory filing on Monday (h/t The AM Law Daily):
As part of the settlement, GS&Co. acknowledged "that the marketing materials for the ABACUS 2007-AC1 transaction contained incomplete information. In particular, it was a mistake for the Goldman marketing materials to state that the reference portfolio was 'selected by' ACA Management LLC without disclosing the role of Paulson & Co. Inc. in the portfolio selection process and that Paulson's economic interests were adverse to CDO investors. Goldman regrets that the marketing materials did not contain that disclosure." Investigations of GS&Co. by FINRA and of GSI by the U.K. Financial Services Authority (FSA) concerning the ABACUS 2007-AC1 transaction and related matters (including the timing of notice to FINRA and the FSA relating to the SEC investigation) continue.
For those confused by the difference between the SEC and FINRA, the former is responsible for protecting individual investors and is run by the government, while the latter is responsible for securities dealers and is funded by the industry. The SEC loosely oversees FINRA.
In June, FINRA ordered Goldman Sachs to pay a $20.6 million fine for its role in the Ponzi scheme pulled off by Bayou Hedge Funds.