Goldman Sachs has been charged with fraud:
The Securities and Exchange Commission today charged Goldman Sachs with defrauding investors by allegedly “misstating and omitting key facts” in the marketing of a financial product linked to the performance of subprime mortgages right as the housing crisis was beginning to unfold.
Essentially, Goldman made billions selling mortgage backed “collateralized debt obligations” (CDO’s), without informing investors that the hedge fund creating these shoddy securities was heavily shorting them in anticipation of their failure.
Which I suppose explains why Republicans so vehemently oppose Wall Street regulatory reform.