Goldman Sachs likely will settle with regulators over a case involving a collateralized debt obligation, and analysts at Bernstein Research estimate such a settlement will result in a $621 million reduction in earnings, or $1.05 a share.
Citing a legal advisor with whom they have spoken, Bernstein analysts said in a report published on May 27 that many informed lawyers agree the SEC’s lawsuit is just not "very strong.” As a result regulators and the investment bank may want to reach a settlement.
According to the analysts at Bernstein Alliance, “Goldman will likely attempt to structure a settlement without admitting or denying any wrongdoing around section 17(a)(2) of the securities act.”
Last month, the Securities and Exchange Commission charged Goldman and a Goldman employee, Fabrice Tourre, with fraud. The investment banking firm was accused of misstating and omitting key facts about a security tied to subprime mortgages that cost investors more than $1 billion.
Goldman shares early on Friday were trading slighly lower at $144.80 a share.