The Securities and Exchange Commission has referred its investigation of Goldman Sachs to the Justice Department for possible criminal prosecution, less than two weeks after filing a civil securities- fraud case against the firm, according to a source familiar with the matter.
Any probe by the Justice Department would be in a preliminary stage. No Goldman Sachs employees involved in the mortgage-related transactions that are the focus of the SEC case have been interviewed by Justice Department prosecutors or FBI agents, who often conduct probes on behalf of prosecutors, according to a source familiar with the matter. The sources spoke on condition of anonymity because they were not authorized to discuss the matter publicly.
The Justice Department usually investigates high- profile cases of securities fraud, but the threshold for criminal prosecution is significantly higher than that of civil cases. The SEC files only civil cases.
The Wall Street Journal and Bloomberg News reported Thursday night that the U.S. attorney’s office in Manhattan had followed up on the request and opened a criminal probe. The office declined to comment.
“Given the recent focus on the firm, we’re not surprised by the report of an inquiry,” said Goldman spokesman Lucas Van Praag. “We would cooperate fully with any request for information.”
It is rare for the government to indict a firm, and the mere threat of criminal prosecution can destroy a company.
