In a mortgage fraud case that has been under development for years, a former trader for investment banking firm Goldman Sachs has been found liable by federal regulators.
The civil trial's verdict, reached by a jury in a Manhattan federal court, comes after the case developed across six years. It was originally spurred by the mortgage crisis of 2007, which had resulted in a deepening of the United States' economic crisis.
The trader, 34, is liable for six of the fraud claims that the Securities and Exchange Commission had filed against him. While precise penalties are to be decided during a subsequent proceeding, he may face fines and possibly even a ban from further work in the financial industry.
The man had been accused of misleading a number of institutional investors. According to the fraud claims filed by the SEC, he knew that certain subprime mortgage securities were going to fail, but did not tell the investors. By withholding key information about the securities, he set up a hedge fund client of Goldman Sachs to position themselves against the securities investment.
In doing so, the hedge fund client made a cool $1 billion. Correspondingly, Goldman Sachs collected millions of dollars' worth of fees, and the trader got a bonus that raised his overall salary to $1.7 million. The trader admitted that at least one of the emails he sent to a securities investor was "not accurate". The defense had argued that many other securities investments in 2007 had also turned out badly, so this could not be considered an isolated instance. He left Goldman Sachs in 2012, two years after the investment paid a $550 million fine. Goldman Sachs denies any wrongdoing by the firm.
There are a variety of complex issues in mortgage fraud legal cases. An attorney who has experience with mortgage fraud issues can work to mitigate the consequences of charges against you.
Source: NBC News, "Ex-Goldman trader 'Fabulous Fab' found liable in mortgage fraud" Tom Hays, Aug. 01, 2013