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Banking

Regulation: Banks fear widening SEC investigation

Goldman Sachs must launch a reputational and legal defence; The SEC has almost as much at stake as its target

Did Goldman mislead investors?

Goldman Sachs CEO Lloyd Blankfein

In the days after the SEC charged Goldman Sachs with fraud, the rest of Wall Street was left reeling. Anyone expecting hands to be rubbed in glee at the sight of mighty Goldman confronted with allegations that it misled investors would have been sorely disappointed.

"The SEC’s case just looks so weak," a banker at a rival firm exclaims to Euromoney. "It does look weak, doesn’t it?"

It’s easy to label the SEC’s surprise attack as political theatre designed to bounce the industry into acceptance of more intrusive regulation by picking on its smartest and most successful firm, and to distract attention from the inspector general’s stinging criticisms of the SEC’s own manifold failures.

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