Goldman may pay $1 bn fine to settle fraud allegations

Goldman Sachs could end up paying $1 billion (670 million pounds) fine if it wants to settle the criminal lawsuit with the US regulator Securities and Exchange Commission, according to a media report.

According to The Telegraph, talks between Goldman and SEC to settle the fraud charges against the bank are at an early stage.

The $1 billion figure would be equivalent to the profit Goldman is said to have made from the alleged fraud.

However, analysts are more conservative about the size of the potential penalties and feel the SEC may asked to pay about $150 million, the report noted.

The SEC has charged Goldman with misleading investors over Abacus, a sub-prime mortgage financial vehicle. It alleges Goldman kept investors in the dark about the $1 billion mortgage deal that saw the Royal Bank of Scotland emerge as one of the biggest casualties, with a loss of $840 million.

The SEC is said to be veering toward an out-of-court settlement, but is determined not to "let Goldman off lightly", because it would send the wrong signals to markets, investors and politicians, the report said.