Monday, April 19, 2010

Congressmen: SEC Should Ask Goldman Sachs to Return AIG Money

This would be so nice - and - fair. Two U.S. congressmen, Elijah Cummings, of Maryland, and Peter DeFazio of Oregon, asked the U.S. Securities and Exchange Commission to force Goldman Sachs Group Inc. (GS) to return funds it got from American International Group Inc. (AIG) "if the insurer sold default protection based on fraudulent conduct by Goldman", reported by The Wall St. Journal today.

AIG has paid about $2B (money from its bail out) to buyers of credit-default swaps paid when the Abacus securities lose value. The Abacus securities are tied to home loans, similarly to the Abacus CDO at the center of the fraud charge.

"It is imperative that the SEC pursue the recovery from Goldman Sachs of any fraudulently obtained AIG payments," the congressmen said in a letter they circulating on Capital Hill, and which is to be sent SEC Chairwoman Mary Schapiro.

"Should this or any subsequent investigation uncover criminal misconduct, we implore you to refer those matters to the Department of Justice for the appropriate prosecution."

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