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Shares of Goldman Sachs are down following reports that federal prosecutors are conducting a criminal investigation into whether the investment bank committed securities fraud. Any potential charges could be far more serious than the $1 billion civil suit currently embroiling the company. However, the investigation is still in a preliminary stage. Here's how business writers are reacting to the news:

  • The Challenges of a Criminal Investigation The Wall Street Journal's Susan Pulliam and Evan Perez explain: "To bring any criminal charges in the Goldman matter, prosecutors would need to believe they had gathered evidence that showed that the firm or its employees knowingly committed fraud in their mortgage business. Proving such intent to break the law typically is the toughest hurdle for prosecutors to clear. Another stumbling block: Such financial cases can be highly complex. Few outside of Wall Street understand arcane products such as collateralized debt obligations, the pools of mortgage-related holdings at the heart of the SEC civil case against Goldman."
  • Is This Fair? Andrew Clark at The Guardian doesn't think so: "You can argue that there shouldn't be such thing as a 'synthetic collateralised debt obligation' in the first place, and you'd have a good point. But Goldman wasn't unique in dabbling in this stuff - it was just the savviest and most successful. The fact is that it's neither unlawful nor unethical to bet against your own clients, or to match together different investors with opposite goals. It's the way Wall Street works."
  • Could the Government Win Such a Case? It's a close call, says Douglas McIntyre at 24/7 Wall Street: "Goldman has been left for dead or at least severely wounded. But, the track records of both the SEC and Justice Department on securities cases is mixed. Goldman has hired an army of attorneys and PR men. Like Apple, it has unlimited resources. And, the government is usually dumber than it seems."
  • This Might Not Be a Big Deal, writes Joe Weisenthal at Business Insider: "Obviously if such charges were brought it would be huge. But is the story really a lot of hot air? CNBC is reporting that there's much less to the story than you might think -- basically it sounds like the DOJ is only at the perfunctory stage of this thing, where they take a look at whatever the SEC is looking at." Seeking Alpha adds, "The investigation is still in preliminary stages, but raises the legal stakes for Goldman and is said to focus on different evidence than that being used in the SEC's civil case."
  • The Real Crime Is What We Consider to Be Legal, writes Henry Blodget at The Huffington Post: "The big message of the aftermath of the crash is this: Almost everything that happened was perfectly legal (and even encouraged by the government). And most of the rest was completely missed by the folks who were supposed to be watching the action and enforcing the laws. So it's time to ask WHY all that stuff was legal... The REAL crime here: The laws in effect at the time."

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