Goldman Shares Fall on Insider-Trading Fears

Monday, 22 Nov 2010 12:48 PM

 

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Shares of Goldman Sachs Group Inc. dropped more than 3 percent on Monday as a widening federal investigation into Wall Street insider trading dragged down shares of bank stocks. Fears about Europe's financial crisis and a bailout of Ireland also weighed on shares of Goldman Sachs and other investment banks.

The Wall Street Journal reported on Saturday that authorities were examining whether insider-trading rings reaped illegal profits totaling tens of millions of dollars. The report, citing people familiar with the matter, said one angle of inquiry concerns whether Goldman Sachs bankers leaked information about transactions to the benefit of certain investors. Goldman Sachs declined to comment to the newspaper, and a spokeswoman declined to comment Monday to The Associated Press.

The probe heated up on Monday when the Federal Bureau of Investigation raided the offices of three hedge funds. Bank stocks were already under pressure because of concerns over how the bailout of Ireland would affect their investment portfolios and their ability to increase dividends.

While the overall market tumbled in midday trading on news of the raids, bank stocks were particularly affected. In addition to the federal insider trading investigation, concerns grow that the bailout of Ireland's troubled banks might not be enough to contain Europe's financial crisis and that other nations such as Portugal could be next to falter. The broader market pared earlier losses to end slightly lower, with the Dow Jones industrial average slipping 0.2 percent.

Bank stocks fared worse, with Goldman Sachs leading the declines. Bank of America shares fell about 3.1 percent, and Morgan Stanley declined about 2.2 percent.

Shares of Goldman Sachs fell $5.62 to close at $161.05, after dropping as low as $158.45 earlier in the session. The stock has traded in a 52-week range of $129.50 to $186.41.

© Copyright 2014 The Associated Press. All rights reserved. This material may not be published, broadcast, rewritten or redistributed.

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