UK Financial Regulators Investigate Goldman Sachs International (UK)

Goldie's Project Abacus Hits Royal Bank of Scotland (RBS) $841 million

Britain’s Financial Services Authority (FSA) said it had started a formal investigation into Goldman Sachs International in relation to the SEC allegations. FSA said it would work closely with its US counterpart.

UK Business Secretary Peter Mandelson said on BBC Radio, “We have got to look at the whole system of constituting and regulating banks. We need a system of regulation, a system of levying banks, which is internationally applied.”

Nick Clegg, leader of the Liberal Democrats, the UK’s third-largest party, said the allegations against Goldman “are a reminder, if we needed one, of the recklessness and greed that disfigured the banking industry as a whole.”

In the United States, political tensions were heightened by reports that the five SEC commissioners split along political lines last week in a vote on whether to file suit against Goldman. The three Democrats voted in favour of the legal action, while the two Republicans opposed it, according to press reports.

“I have my doubts about this attack on Goldman Sachs, for the simple reason that with two members of the SEC clearly against the indictment, it doesn’t make (SEC Chairman) Mary Schapiro’s job any easier,” said David Buik, senior partner with BGC Partners in London.

Royal Bank of Scotland Group PLC, 84% owned by the U.K. government, inherited the Goldman Sachs product from ABN Amro, part of which it bought in 2007. In its civil filing to a New York court, the SEC said RBS lost $841 million by unwinding the position in 2008, following the collapse of the U.S. subprime mortgage market.

A person familiar with the situation said RBS is keeping all options open in regard to possible legal action against Goldman.
U.K. Prime Minister Gordon Brown said over the weekend that he would instruct the FSA to conduct an immediate special investigation into how Goldman's alleged actions affected British banks.

"The FSA will be liaising closely with the SEC in this review," it said in Tuesday's statement.

An FSA spokeswoman said the regulator won't make any further comment until or unless a charge or enforcement action is made, and that there is no set timeline for the investigation.

The German government also said it will seek information about the case, after one of its banks, IKB Deutsche Industriebank AG, bought a significant amount of the Goldman Sachs product in question.

IKB was later bailed out by the German government in the financial crisis.
Goldman Sachs has denied the allegations, and said it will cooperate with the FSA.

British Parlimentrians have called for immediate suspension of all GS contracts and services with the government until the probe is completed.

The Goldie Sandiwara Part 2 has began

.... hehehehe