Goldman Sachs: $550M Fine

“This settlement is a stark lesson to Wall Street firms that no product is too complex, and no investor too sophisticated, to avoid a heavy price if a firm violates the fundamental principles of honest treatment and fair dealing,” said Robert Khuzami, enforcement director for the Securities Exchange Commission.

Goldman Sachs has agreed to pay the SEC $300 million in fines and $200 million in restitution to investors taken by the fraud, according to people familiar with the deal.

The company, however, does not have to admit wrongdoing.

The fine is the largest against a financial company in SEC history, but is only 1/20th of the $10 billion in bonuses the firm handed out last year.

The company earned $13.4 billion in 2009 and $3.3 billion in the first quarter of this year.

Goldman Sachs was accused of misleading investors by failing to tell them the mortgage securities had been chosen by a Goldman hedge fund client, Paulson & Co., that was betting the investments would fail

The civil suit, charging Goldman with securities fraud, was filed by the SEC on April 16.

It remained unclear if a separate criminal investigation of Goldman by federal prosecutors will be called off.

Goldman and other Wall Street giants have come under heavy scrutiny for the financial shenanigans that helped fuel the nation’s economic meltdown.

Executives at Goldman were hauled before a Senate committee for an embarrassing public grilling about whether they bilked investors and pocketed huge bonuses with financial instruments that were designed to fail.

The senators charged that Goldman marketed instruments for investors while selling the same investment “short” – making a bet it would tank.

Goldman’s shares rose 4.2% after the stock market closed Thursday.