Goldman Sachs Fined

Regulators have ordered Goldman Sachs Group Inc. to pay $20.6 million to investors, who were defrauded due to an investment scheme that lead to investors losing a lot of money in the collapsed Bayou Hedge Funds.

A panel from the Financial Industry Regulatory Authority found Goldman Sachs former Execution & Clearing unit response for its failure, to prevent this type of fraud. It also criticized the role of Goldman Sachs in the whole affair.

Bayou Hedge Funds had collapsed in the year 2005 and its CEO and Chief Financial Officer had admitted to using lies about the Company’s profits and to set up a fraudulent accounting Company in order to forge audits.

Attorneys from Rich & Intelisano LLP pointed that Bayou deposited this money into the accounts of Goldman Sachs. It is a New York based law firm and mainly represents investors in securities related cases. They also pointed that Goldman handled the trading from 1999 to 2004 in Bayou.

The total fraud was worth $250 million and most of the people were small investors, who had invested amounts ranging from $300,000 to $500,000. These people were promised an annual interest of up to 12%.

Goldman maintained that it did not do anything to claim this money and was a victim of the fraud committed by Bayou with its investors.