Goldman Sachs Settles Political Case

Daily Herald (Arlington Heights, IL), September 28, 2012 | Go to article overview

Goldman Sachs Settles Political Case


Byline: Bloomberg News

Goldman Sachs Group Inc. will pay $14.4 million to resolve regulatory claims that a former banker made improper campaign contributions to the treasurer of Massachusetts while seeking underwriting business.

Neil Morrison, who was a vice president in Goldman Sachs's Boston office, worked for Treasurer Timothy P. Cahill's unsuccessful gubernatorial campaign from November 2008 to October 2010, sometimes during his office hours, the U.S. Securities and Exchange Commission said in a statement today. That constituted in-kind contributions and broke pay-to-play rules, the U.S. Securities and Exchange Commission said.

The settlement, which includes $4.6 million paid to Massachusetts, is the SEC's first involving noncash contributions and is the latest since the agency began bolstering oversight of the $3.7 trillion municipal-bond market in 2010. At that time, SEC Enforcement Director Robert Khuzami set up a task force to investigate bid-rigging for municipal- investment contracts. The agency is looking into banks, local governments that don't disclose their true financial condition, and public officials who hire advisers based on political contributions.

"The pay-to-play rules are clear: Municipal finance professionals that use their firm's resources to campaign on behalf of political candidates compromise themselves and the firms that employ them," Khuzami said.

The campaign work by Morrison, 38, disqualified Goldman Sachs from underwriting bonds for Massachusetts and its agencies for two years after the contributions, the SEC said. Nevertheless, the New York-based firm participated in 30 prohibited underwritings, earning more than $7.5 million in improper fees, according to the agency.

"We detected Morrison's activities, promptly alerted regulators, terminated his employment, and fully cooperated with the investigations," Michael DuVally, a Goldman Sachs spokesman, said in a statement. "We accept responsibility for the consequences."

Goldman Sachs didn't admit or deny wrongdoing. …

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