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ISCOVER
By: Jessica Darnbrough
The reputation of international investment bank Goldman Sachs has come under fire, after the US Securities and Exchange Commission (SEC) filed civil fraud charges against the bank.
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It is alleged the bank and one of its executives failed to disclose a conflict of interest, and arranged mortgage investments without telling clients that the portfolio was put together with help from a hedge fund that was betting on them to fail.
The bank’s chief executive officer Lloyd Blankfein is expected to tell a US Senate hearing today that the firm did not mislead clients, and repeat the firm's argument that it lost US$1.2bn ($1.3bn) in the housing mortgage market during 2007 and 2008.
"If our clients believe [the charges] we don't deserve their trust, we cannot survive," Mr Blankfein said.
He also acknowledged that "we have to do a better job of striking the balance between what an informed client believes is important to his or her investing goals and what the public believes is overly complex and risky."
