Democratic lawmakers urge the SEC to follow the money on Goldman fraud

Reps. Elijah Cummings (D-Ma.) and Peter DeFazio (D-Ore.) on Monday praised SEC Chairwoman Mary Schapiro for taking action against Goldman Sachs, which allegedly misled investors on mortgage-backed securities that turned toxic, and urged the Commission to continue to investigate similar transactions by the bank. 

"The compliant is based on a single [investment] knows as ABACUS 2007-ACI," the lawmakers wrote to Schapiro. "However the ABACUS 2007-ACI offering was part of a series of 25 such [investments], all arranged by Goldman Sachs. It is not beyond the realm of comprehension that the 24 remaining ABACUS transactions included similar materially misleading statement to investors in order to protect Goldman's internal proprietary bets." The lawmakers noted that 7 of these investments were guaranteed by American International Group (AIG), which transferred $12.9 billion in bailout funds to Goldman after the market collapsed. 

"[It] is imperative that the SEC pursue the recovery from Goldman Sachs of any fraudulently obtained AIG payments," they wrote, adding, "should this or any subsequent investigation uncover criminal misconduct, we implore you to refer those matter to the Department of Justice for the appropriate prosecution."