Goldman Sachs fined £20m by Financial Services Authority – reports

Goldman Sachs has been fined £20m ($31m) by the UK City regulator, the Financial Services Authority, according to reports tonight. The FSA launched an investigation into the bank in April after the US securities and exchange commission charged Goldman with misleading investors in a mortgage-backed security known as Abacus. Fabrice Tourre, the employee who had been involved in marketing the collateralised debt obligation (CDO), came under fire for his alleged role. The FSA inquiry was the result of its investigation into the bank's business practices in London. A formal announcement is expected tomorrow, but tonight the BBC said Goldman has been fined £20m for allegedly failing to tell the FSA it was under investigation for fraud by the US financial watchdog this summer. In July, Goldman settled the fraud charge with the SEC by paying $550m (£356m), the largest fine in the SEC's history. Goldman accepted that the marketing materials it issued to investors for the Abacus transaction at the heart of the regulator's case gave "incomplete information". The complex subprime mortgage investments were marketed just as the US housing market was about to collapse. The commission alleged Goldman had packaged up mortgages into Abacus and then sold the CDO to investors without telling them one of its powerful clients, the hedge fund Paulson & Co, had been taking a trading position intended to profit from a fall in the value of US house prices. Goldman did not admit or deny the damaging allegations. According to the BBC, the FSA said Goldman had not told them that Tourre, who helped to create the mortgage derivatives, was under investigation. Tourre had moved from the US to London.