DBRS Comments on SEC Allegations of Fraud Charges at Goldman Sachs - Senior at A (high)

DBRS has today commented on the Securities and Exchange Commission’s (SEC) allegation of fraud at The Goldman Sachs Group, Inc. (Goldman or the Company) in the structuring and marketing of a synthetic CDO tied to subprime mortgages. The civil complaint alleges that Goldman Sachs & Co. (GS&Co.) and a GS&Co. employee defrauded investors by misstating and omitting key facts. GS&Co. is the principal U.S. broker-dealer of the Company. Responding to the complaint, Goldman stated that the charges are unfounded and noted several critical points that it claims were missing from the SEC complaint. DBRS currently rates Goldman’s senior debt at A (high) and short-term instruments at R-1 (middle). The trend on all ratings is Stable.

DBRS is currently evaluating the potential impact of the allegation, which may have legal and financial ramifications for the Company. DBRS views this allegation as negatively affecting Goldman’s reputation, but the severity of any adverse impact is not yet known.

Underpinning the current ratings are Goldman’s diversified businesses across its global franchise. The current ratings consider the resiliency of this franchise, its strong performance across its many capital markets businesses and the strength of its underlying earnings during this cycle. Additionally, the Company has improved its risk profile, strengthened its capitalization and enhanced its liquidity.

Note:
All figures are in U.S. dollars unless otherwise noted.

The applicable methodologies are the Global Methodology for Rating Banks and Banking Organisations, and Enhanced Methodology for Bank Ratings – Intrinsic and Support Assessments which can be found on our website under Methodologies.

This is a Corporate (Financial Institutions) rating.