Tags: Goldman | Pay | Play | Probe

Goldman to Pay $12 Million to Settle 'Pay-to-Play' Probe

Thursday, 27 Sep 2012 11:08 AM

 

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Goldman Sachs Group Inc. agreed to pay about $12 million to settle charges that it violated "pay-to-play" rules in a case involving undisclosed campaign contributions to a former Massachusetts state treasurer who was a candidate for governor in the state, U.S. securities regulators said on Thursday.

A former vice president in Goldman's Boston office, Neil Morrison, worked on the campaign of Timothy Cahill around the same time that he was also soliciting underwriting business from the Massachusetts treasurer's office, the Securities and Exchange Commission said.

Goldman settled without admitting or denying the charges. The SEC also charged Morrison, and the case against him continues.

A Goldman spokesman, Michael DuVally, said in a statement the firm detected Morrison's activities, fired him, and alerted and cooperated with regulators.

"We accept responsibility for the consequences of his unauthorized actions under the terms of the settlements announced today and are pleased to resolve these investigations," DuVally said.

A lawyer for Morrison did not immediately respond to a request for comment.

Cahill was indicted earlier this year on corruption and fraud charges, to which he had pleaded not guilty. He could not immediately be reached for comment.

According to the SEC, Morrison conducted campaign activities for Cahill, including fundraising, drafting speeches, and speaking to reporters, and some of this work was done from Goldman's offices during business hours.

That work disqualified the firm from bidding for municipal underwriting business with certain issuers in the state. But Goldman went on to participate in 30 prohibited underwritings, earning it more than $7.5 million in fees, the SEC said.

"The pay-to-play rules are clear: Municipal finance professionals that use their firm's resources to campaign on behalf of political candidates compromise themselves and the firms that employ them," Robert Khuzami, who heads the SEC's enforcement division, said in announcing the case.

© 2014 Thomson/Reuters. All rights reserved.

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