Goldman to Pay $20 Million to Settle Bond Rigging Lawsuit
The Goldman Sachs Group, Inc. GS is required to pay $20 million as penalty in order to settle a lawsuit accusing the bank of rigging bond prices issued by Fannie Mae and Freddie Mac. The settlement is yet to get judge’s approval.
The lawsuit was filed against 15 other financial institutions, accusing them to have exploited their market presence by raising prices of bonds in the period between 2009 and 2015. Goldman, Barclays Plc BCS, JPMorgan Chase and UBS Group UBS are said to have underwritten $3.97 trillion, or 77.2% of such bonds.
Though Goldman has not accepted any wrongdoings, it has agreed to make changes to its antitrust-compliance policies related to bond trading as part of the settlement terms. The firms remaining as defendants in the case are Credit Suisse, Barclays and Citigroup.
Also, the company has presented 71,000 pages of potential evidence along with four transcripts of chatroom conversations between its traders and those from Deutsche Bank DB, BNP Paribas SA, Morgan Stanley and Merrill Lynch.
The class action is led by Pennsylvania Treasurer Joe Torsella, a Birmingham, AL public pension fund, and electrical workers’ retirement and health plans in Dorchester, MA.
Our Take
While Goldman is on track to remodel its business into a more profitable organization, it continues to face several legal investigations, which are likely to keep costs elevated. Also, declining trading revenues due to low levels of volatility and client activity remain a concern.
The stock has gained 31.9% over the past six months compared with 12.2% growth of the industry it belongs to.
Goldman currently carries a Zacks Rank #4 (Sell).
You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
7 Best Stocks for the Next 30 Days
Just released: Experts distill 7 elite stocks from the current list of 220 Zacks Rank #1 Strong Buys. They deem these tickers “Most Likely for Early Price Pops.”
Since 1988, the full list has beaten the market more than 2X over with an average gain of +24.5% per year. So be sure to give these hand-picked 7 your immediate attention.
See them now >>
Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report
Deutsche Bank Aktiengesellschaft (DB) : Free Stock Analysis Report
Barclays PLC (BCS) : Free Stock Analysis Report
UBS Group AG (UBS) : Free Stock Analysis Report
The Goldman Sachs Group, Inc. (GS) : Free Stock Analysis Report
To read this article on Zacks.com click here.
Zacks Investment Research
