Case Goldman Sachs may be just the tip of the iceberg

The current investigation of the case against Goldman Sachs Group about fraud when trading collateralized debt obligations (CDO), may be just the tip of the iceberg and the beginning of serious problems for the banks on Wall Street, reports Reuters.

Investigation of an Internet portal ProPublica, concerning the game of the Chicago hedge fund Magnetar against CDO in 2007, has already led to accusations of conflict of interest with respect to Deutsche Bank, Merrill and JPMorgan Chase. Commission on Securities and Exchange (SEC) said it will seriously consider all such cases.

In relation to the Goldman Sachs, then there are several possible scenarios. First, the bank’s management is likely to prefer to pay a fine, even a few hundred million dollars, rather than allow a long-term investigation, which will seriously damage the reputation of the company.

On the other hand, the authorities, given the politically charged case, the desire to show the public that all are equal before the law, can not agree to a quick settlement. Furthermore, in this case, Goldman will have to face numerous lawsuits from affected investors, consideration of which will drag on for years.

The worst option is that Goldman will struggle with the authorities, the investigators would get into the light of a few problematic transactions and accused several other leaders. Lawsuits from customers will accumulate and damage will increase many times. And although the criminal case is seen as an unlikely turn of events, yet it is also completely discounted.

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