Now that keeping secrets about an investor has landed Goldman Sachs in hot water with the Securities and Exchange Commission (SEC), a new disclosure issue has arisen. The question, in a nutshell, is: why didn’t Goldman tell its investors that it was being investigated?
In a conference call on Tuesday, Goldman general counsel Gregory Palm first defended the company against the SEC’s fraud suit. He said Goldman was not legally required to disclose that an investor that helped choose a portfolio of subprime mortgage debt was taking a short position – meaning that the investor was betting the portfolio would lose money.
