Goldman Sachs denied as "completely unfounded" fraud allegations against the company by the U.S. Securities and Exchange Commission, UPI reported. The SEC, in a civil lawsuit Friday, claims Goldman Sachs created and sold mortgage investments secretly intended to fail, The New York Times reported. In a statement, Goldman Sachs said, "The SEC's charges are completely unfounded in law and fact and we will vigorously contest them and defend the firm and its reputation." The SEC said the Wall Street financial services firm sold mortgage securities that included bonds selected by John Paulson, a hedge fund manager who made billions of dollars betting against the housing market. Goldman Sachs then sold the securities to investors like foreign banks, pension funds and insurance companies, and the investors lost more than $1 billion in the deal, the commission said. "Goldman wrongly permitted a client that was betting against the mortgage market to heavily influence which mortgage securities to include in an investment portfolio," Robert Khuzami, the director of the commission's enforcement division, said in a statement. The complaint says Goldman Sachs advertised the securities as "selected by ACA Management," referring to the company managing the deals. Goldman Sachs also did not reveal the trader choosing the securities was investing heavily on a market collapse, the Times said. The lawsuit also names Goldman Vice President Fabrice Tourre, who allegedly helped create the instruments, known as Abacus 2007-ACI. -- SPA
