On August 9, 2012, Goldman Sachs announced that the U.S. Department of Justice (DOJ) declined to prosecute the bank or its employees in connection with the findings in an April 2011 Senate report that probed the early days of the 2008 financial crisis. The Senate report discussed apparent conflicts of interest by Goldman Sachs and Deutsche Bank by selling clients securities that were described internally by the banks as “crap” and “pigs,” while simultaneously profiting from the transactions by shorting them or, in other words, betting against them. In a related statement, the DOJ conceded that the “burden of proof” could not be met at this time, but left open the possibility of bringing charges in the future if additional information is uncovered.
On the same day, Goldman Sachs announced that the U.S. Securities and Exchange Commission (SEC) ceased its investigation in connection with the 2006 offering documents and sale of $1.3 billion in mortgage-backed securities that were underwritten by the bank. In February 2012, Goldman had received a Wells notice stating that the SEC was contemplating an enforcement action in connection with the offering. Goldman indicated that it cooperated with the SEC during the investigation, but that the SEC staff stated that they do “not intend to recommend an enforcement action by the SEC.” (“Goldman Avoids DOJ Charges, SEC Probe Into MBS Sales,” Reuters, August 9, 2012).