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SEC Inspector General: No Politics Behind Goldman Suit

A special investigation by the inspector general of the Securities and Exchange Commission found no evidence of political motivation in a fraud lawsuit the agency brought against Wall Street heavyweight Goldman Sachs, according to a report released Wednesday.

Goldman Sachs
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Goldman Sachs

The SEC's Office of Inspector General conducted the investigation at the request of Rep. Darrell Issa (R-Calif.) and other members of the U.S. House, who alleged that the White House and other Democratic officials timed the Goldman lawsuit to affect financial reform legislation.

Goldman Sachs settled its case with the SEC, which alleged the investment bank misled investors about specific mortgage products, for a record $550 million in July.

"The OIG has not found evidence indicating that the SEC's investigation of, or its action against, Goldman was intended to influence, or was influenced by, financial regulatory reform legislation," the report stated.

The OIG also found no evidence the announcement of a settlement with Goldman was timed to coordinate with efforts to pass the financial reform bill, which Congress voted into law just weeks later.

Instead, the report states, concerns over media leaks were a driving force.

"Testimony and documentary evidence indicate that the SEC staff wanted the SEC to be able to 'shape' the story before Goldman had an opportunity to do so," the report stated.

Rep. Issa released a statement late Wednesday praising Inspector General David Kotz's investigation.

"At a time when public skepticism in government is rising and the SEC specifically is working to regain our confidence after the Madoff-Stanford cases, it is reassuring that we have an Inspector General like Mr. Kotz who is willing to diligently pursue the truth when relevant questions are asked that threaten the integrity and legitimacy of the SEC and its actions," the statement read.