We've noted that both Goldman Sachs (NYSE: GS) and the SEC (SEC news) have their lines in the sand. Goldman Sachs cannot admit to fraud for reasons well-known. The SEC cannot afford to be seen as weak on crime and risk having a settlement denied by a federal judge, which happened with Judge Jed Rakoff and the Bank of America (NYSE: BAC) settlement.

CNBC reports that the compromise position might be something along these lines: "Goldman Sachs might accept a settlement if the civil charges requiring fraudulent intent or claiming a scheme that operated as fraud were dropped, a source said. That would leave open the charge of merely negligently ‘misleading' the investors in the Abacus deal. A source close to the matter indicated that this would be far more palatable to the company since it does not explicitly implicate Goldman in fraud."

It seems like a minor distinction. But the issue really is not so much reputational damage, which has already been severe, but rather the likelihood of massive amounts of private litigation. So while the SEC has shown a willingness to cut these sorts of deals, Goldman Sachs will have to determine if such an arrangement will result in significantly less private litigation. 

For more:
- here's the article

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