Other Wall St. Banks as Guilty as Goldman

Many engaged in same activities SEC is now calling fraudulent
By Kevin Spak,  Newser Staff
Posted Apr 19, 2010 8:15 AM CDT
Other Wall St. Banks as Guilty as Goldman
People arrive at the Merrill Lynch building on a rainy morning on Thursday, Nov. 15, 2007 in New York.   (AP Photo/Brian McDermott)

The SEC's fraud suit against Goldman Sachs might be just the tip of the iceberg, because other investment banks engaged in exactly the same sleight of hand, Pro Publica reports. Goldman is accused of failing to disclose that a hedge fund was both helping to create, and betting against, the investments Goldman was selling. But several other investment banks, including JPMorgan Chase, Merrill Lynch and Citigroup all did the same thing.

The SEC is already investigating some of these other deals, the Wall Street Journal adds. The agency says it'll sue if it believes banks misrepresented securities to their clients. Indeed, Rabobank already sued Merrill Lynch last year, alleging that Merrill did just that with some securities that the hedge fund Magnetar helped create and bet against. When the Goldman case came out, Rabobank issued a statement saying it was “the same type of fraudulent conduct” Merrill had engaged in. (More Securities and Exchange Commission stories.)

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