The Goldman Sachs Group, Inc. (NYSE: GS) today announced that Goldman,
Sachs & Co. has entered into a settlement in principle with the Office
of the Attorney General of the State of New York and the Illinois
Securities Department (on behalf of the North American Securities
Administrators Association) regarding auction rate securities (ARS).
Under the settlement, Goldman Sachs will offer to immediately repurchase
at par the outstanding auction rate securities that are held by its
Private Wealth Management clients and were purchased through the firm
prior to February 11, 2008. Goldman Sachs has informed the Securities
and Exchange Commission (SEC) of the agreement and intends to fully
cooperate with the SEC’s ongoing
investigation. The terms of the settlement include:
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Goldman Sachs will pay a $22.5 million penalty.
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Goldman Sachs neither admits nor denies allegations of wrongdoing.
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Effective immediately, Goldman Sachs will offer to repurchase at par
approximately $1 billion of ARS still held by private clients that
were purchased through the firm prior to February 11, 2008, with the
exception of those ARS where auctions are clearing. Clients who are
eligible for this offer include individuals, all charities and
non-profits, and those businesses with accounts of $10 million or
less. The firm will complete all buybacks no later than November 12,
2008.
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Goldman Sachs will compensate private clients who purchased ARS
through the firm before February 11, 2008, and sold such securities at
a loss between that date and the date of this announcement.
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To the extent that a private client has incurred consequential damages
beyond the loss of liquidity in the private client’s
holdings of ARS, Goldman Sachs will participate in a special
arbitration process in which Goldman Sachs will be precluded from
contesting liability from the sale of the ARS.
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Goldman Sachs will endeavor to continue to work with issuers and other
interested parties, including regulatory and government entities, to
expeditiously provide liquidity solutions for institutional investors.
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Goldman Sachs will refund financing fees that it received from all
municipal ARS issuers that issued ARS in the primary market through
Goldman Sachs between August 1, 2007 and February 11, 2008, and
refinanced those securities after February 11, 2008.
Goldman Sachs is a leading global investment banking, securities and
investment management firm that provides a wide range of services
worldwide to a substantial and diversified client base that includes
corporations, financial institutions, governments and high net worth
individuals. Founded in 1869, it is one of the oldest and largest
investment banking firms. The firm is headquartered in New York and
maintains offices in London, Frankfurt, Tokyo, Hong Kong and other major
financial centers around the world.
Goldman Sachs
Media:
Andrea Raphael, 212-902-5400
or
Investors:
Dane
Holmes, 212-902-3580
