The Securities and Exchange Commission has reached a $550 million settlement with Goldman Sachs Group Inc. that will resolve its lawsuit against the firm alleging that it misled investors in a subprime mortgage product, the agency announced Thursday.
The SEC sued Goldman in April, charging it with fraud in marketing of a complex financial product called Abacus 2007-AC1 that was based on mortgage-backed securities. The suit is the highest profile of a number of inquiries regulators are making into synthetic collateralized debt obligations.
In agreeing to the SEC’s largest-ever penalty paid by a Wall Street firm, Goldman also acknowledged that its marketing materials for the subprime product contained incomplete information, the SEC said.
Goldman denied any wrong doing in the SEC lawsuit but has been under pressure from shareholders to reach a settlement on the fraud lawsuit and other SEC probes.