Legal News

SEC watchdog blunts accusations on Goldman timing

By (Breaking Legal News)

The watchdog of the Securities and Exchange Commission has found no hard evidence that the SEC timed the announcement of its fraud case against Goldman Sachs to eclipse negative news about a separate case.

Inspector General David Kotz's report Wednesday was a response to demands from congressional Republicans who had questioned the timing of the Goldman charges. The SEC announced the charges on April 16, the same day it released Kotz's blistering report on the agency's failure to catch R. Allen Stanford's alleged Ponzi scheme.

But the report says that the way the SEC managed the Goldman case showed it was trying to maximize positive press coverage. Kotz's report says the agency didn't want a congressional panel to break the news first.

Kotz found that the SEC's timing of its Goldman announcement was delayed a day so as not to overshadow its announcement of a settlement with investment firm Quadrangle Group. He said the SEC wanted to maintain a positive relationship with New York Attorney General Andrew Cuomo, who was announcing his own settlement with Quadrangle that day

Kotz's investigation also found no evidence that SEC officials coordinated the timing of actions on Goldman with anyone in the Obama administration or Congress to help speed passage of the financial overhaul law.

In his investigation of the agency's handling of the Stanford case, Kotz found that SEC staff had known since 1997 that the billionaire was likely operating a Ponzi scheme but didn't charge him until February 2009. The charges came a few months after the Bernard Madoff pyramid surfaced.

At a Senate hearing last month, Kotz had termed "suspicious" the timing of the agency's civil fraud charges against Goldman.

Full post as published by Breaking Legal News on October 13, 2010 (boomark / email).