Goldman Sachs now faces 20 mn pound fine in UK: report

"Goldman Sachs is facing a fine thought to be near 20 million pound from UK's financial regulator following a 5-month investigation into investment bank's international business initiated in the wake of fraud charges against the company in the US," The Financial Times stated.

The fine is expected to be announced by the Financial Services Authority (FSA) later today, it added. The penalty would deal a blow to Goldman's efforts to put the high-profile case behind it following the bank's settlement with the US Securities and Exchange Commission (SEC) probe for USD 550 million in July.

The FSA opened its investigation into the bank in April after the US market regulator had charged Goldman with misleading investors in a complex mortgage-backed security known as Abacus.

The SEC claimed that Goldman had failed to disclose that a hedge fund, which was betting against the security, had selected some of the mortgage loans included in the portfolio, costing investors as much as USD 1 billion, the report said.

The largest fine imposed by the UK regulator was on JP Morgan, who had to pay 33.3 million pounds for failing to keep client money in separate accounts, three months ago. Goldman has seen its reputation tarnished in recent months as questions continue to swirl over whether it favoured the interests of some clients at the expense of others during the financial crisis, the FT said.

In settling the Abacus case with the SEC, Goldman had said it made a "mistake," but it neither admitted nor denied the agency's allegations. Attributing to people familiar with the matter, the report stated the fine is not based specifically on the Abacus transaction, but is the result of its investigation into the bank's business practices in London sparked by the SEC allegations.

The FSA's decision to launch its own inquiry, announced four days after the SEC case, was questioned by some legal experts at the time given that the Abacus deal was structured in the US, the report added.

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