Goldman Sachs announced yesterday that it has agreed in principle to a $5.06 billion settlement with the U.S. Department of Justice (“DOJ”), which would resolve claims stemming from several state and federal investigations concerning the investment banking giant’s underwriting and sale of residential mortgage-backed securities (“RMBS”) from 2005 to 2007. To date, the DOJ has reached similar settlements with JPMorgan Chase & Co., Citigroup Inc., Bank of America Corp., and Morgan Stanley. According to the DOJ, its settlement with Bank of America was the largest civil settlement it has ever reached with a single entity in American history.
Goldman Sachs cautioned in a press release yesterday that “[t]he agreement in principle is subject to the negotiation of definitive documentation, and there can be no assurance that the firm, the U.S. Department of Justice and the other applicable governmental authorities will agree on the definitive documentation.” The negotiation process may take months. For example, the DOJ and Morgan Stanley have not yet finalized their $2.6 billion agreement in principle, which was announced in February 2015.
Separately, Goldman Sachs also announced yesterday that it will pay $15 million to resolve allegations brought by the U.S. Securities and Exchange Commission, which accused Goldman Sachs of inadequately securing the stock needed to administer short-selling trades.