Is this the end of the matter? The Goldman Sachs-SEC settlement was pretty much a plain vanilla agreement that allows both sides to claim a victory of sorts. By extracting a $550 million fine ($250 million goes into a Fair Fund, the rest goes to Treasury), the SEC (SEC news) can crow that it had levied the largest penalty ever imposed by the agency. It can also claim that it is forcing the gilded bank to reform certain sales practices, even though the reform measures seems pretty fluffy.

Goldman Sachs (NYSE: GS) on the other hand won in its bid to avoid admitting to fraud (fraud news). Instead, it acknowledged a mere "mistake" in that "the marketing materials for the ABACUS 2007-AC1 transaction contained incomplete information. In particular, it was a mistake for the Goldman marketing materials to state that the reference portfolio was "selected by" ACA Management LLC without disclosing the role of Paulson & Co. Inc. in the portfolio selection process and that Paulson's economic interests were adverse to CDO investors."

The issue is whether this settlement is deemed enough punishment. The deal must now be approved by Barbara Jones, a United States District Judge for the Southern District of New York.

I am not sure this is a slam dunk at all. We'll just have to wait and see. But there's always the possibility that she'll pull a Rakoff, as in Judge Jed Rakoff, and rake both sides over the coals. One line of questioning is obvious. If you are convinced there was actual fraud, why do you let the firm get away with simply admitting to a "mistake" and a simple marketing omission.

One interesting side, if the settlement sticks, it absolves the company. But the SEC's litigation against Fabrice "Fab" Tourre, a vice president at Goldman and the only individual charged, continues.

For more:
- here's the release
- here's the consent
- here's the judgment

Related Articles:
Goldman Sachs to settle with SEC on Abacus CDO fraud charges
More private suits target big Wall Street banks
Liberty Mutual sues Goldman Sachs over Fannie Mae offering
Goldman Sachs to pay $20.6 million to settle dispute