By Mark Memmott

"The government has accused Goldman Sachs & Co. of defrauding investors by failing to disclose conflicts of interest in mortgage investments it sold as the housing market was faltering," the Associated Press writes. It adds that:

"The Securities and Exchange Commission announced Friday civil fraud charges against the Wall Street powerhouse and one of its vice presidents. The agency alleges Goldman failed to disclose that one of its clients helped create -- and then bet against -- subprime mortgage securities that Goldman sold to investors. ... A Goldman Sachs spokesman didn't immediately return a call seeking comment."

The Wall Street Journal writes that "the Goldman complaint is part of the SEC's investigation into investment banks and others that securitize complex financial products tied to the U.S. housing market as it was beginning to show signs of distress, according to Kenneth Lench, Chief of the SEC's Structured and New Products Unit."

Bloomberg News adds that:

"The product was new and complex but the deception and conflicts are old and simple," SEC Enforcement Director Robert Khuzami said in a statement. "Goldman wrongly permitted a client that was betting against the mortgage market to heavily influence which mortgage securities to include in an investment portfolio, while telling other investors that the securities were selected by an independent, objective third party."

The SEC has posted a statement about its action here. The commission's court complaint is online here.

Update at 12:15 p.m. ET: On the last "feed" of Morning Edition just a short time ago, NPR's Yuki Noguchi told host Renee Montagne that the SEC is "very eager to make sure that banks weren't double-dealing and weren't misrepresenting their investments to consumers":

categories: Business, Crime

11:33 - April 16, 2010