On July 15, the SEC announced that Goldman Sachs will pay US$550 million, as well as reform its business practices, in order to settle SEC charges that it had misled investors in a subprime mortgage product. In paying the largest-ever penalty levied against a Wall Street firm, Goldman also acknowledged that its marketing materials for the subprime product contained incomplete information.
Of the $550 million settlement (which includes disgorgement and a fine), $250 million will be paid to harmed investors through a Fair Fund distribution, and $300 million will be paid to the U.S. Treasury.
The SEC created the Fair Fund in 2002 so that disgorgement payments and civil fines could be distributed to investors harmed by securities law violations. FAIR Canada urges Canadian regulators to create a similar type of fund in Canada so that investors harmed through securities law violations are properly and effectively compensated, and continue to invest with confidence in the Canadian capital markets.
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