Manhattan DA Serves Goldman Subpoena Over Financial Crisis

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Goldman Sachs has received a subpoena from the office of the Manhattan District Attorney, which is investigating the investment bank's role in the financial crisis, according to Dealbook, which quotes people with knowledge of the matter.

The inquiry apparently is related to a 650-page report from the Senate's Permanent Subcommittee on Investigations that alleged Goldman had misled clients and Congress about its practices related to mortgage-linked securities.

It has been previously reported that Senator Carl Levin, head of the Congressional inquiry, had sent his findings to the Justice Department to looking into whether any Goldman executives have broken the law. The agency said it was reviewing the report.

Dealbook reports the subpoena comes two weeks after lawyers for Goldman Sachs met with the Manhattan district attorney's office for what was termed an "exploratory" meeting about the Senate report.

A Goldman spokesperson would only say "we don't comment on specific regulatory or legal issues, but subpoenas are a normal part of the information request process and, of course, when we receive them we cooperate fully."

Goldman has been the target of criticism for some time now including allegations that it had shorted the mortgage market before it collapsed and made a fortune off of its own clients who were on the long side.

The Senate subcommittee published a harsh report last month saying that the words "net short" appeared 3,400 times in Goldman documents related to the mortgage market. It also quoted a letter from Goldman to the SEC in which it admitted that it "maintained a net short sub-prime position and therefore stood to benefit from declining prices in the mortgage market."

However, in his testimony before the committee Goldman CEO Lloyd C. Blankfein denied the firm was making large bets against residential mortgages while selling securities based on home loans. This discrepancy is one of the key matters the Senate subcommittee wants resolved.

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