A federal district judge dismissed a securities fraud charge against Goldman Sachs yesterday on grounds that the plaintiffs hadn’t show the transaction occurred in the United States.
There were no doubt sighs of relief at Goldman. Once again, Goldman has avoided having to deal with fraud charges head-on.
The case tracked closely the one brought by the Securities and Exchange Commission last year. Basically, Goldman was accused of selling a foreign investor a stake in a collateralized debt obligation while failing to disclose it had a short position on the underlying mortgage securities.
The judge threw out the case based on a recent U.S. Supreme Court ruling that held that securities fraud laws only apply to deals that take place in the U.S. Of course, in the age of electronic communications, global financial firms and international investments it can be quite tricky to find out where a deal actually “takes place.”
