Fox Business News reports that Goldman Sachs (NYSE: GS) may initiate negotiations to settle the SEC's (SEC news) allegations of fraud related to a synthetic CDO deal that ended poorly for investors. The plan all along was to file a response in court to the charges and then settle. The response may be filed very soon, apparently.

Goldman Sachs really has no choice but to settle. A prolonged battle would do it no good, and the risk of a jury trial in an anti-Wall Street environment would represent way too much risk. A federal laws might end up banning pensions from doing business with it if it lost.

"From Goldman's standpoint, settlement talks, according to sources, would likely focus on regulators backing off serious civil securities fraud charges and instead would have Goldman paying a fine, and concede to lesser charges such as negligence." However, I would think it paramount for the firm to be able to not admit any guilt. I think we'll get a settlement sooner rather than later. One could argue that the SEC, in a sense, really threw the dice with this one. They certainly maximized their headline potential and caught the firm off guard. More than likely, they were counting on the firm settling. Given the evidence, they would have had a hard time in court. 

For more:
- here's the article

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