WASHINGTON (AP) -- Investment giant Goldman Sachs is denying federal fraud charges.
The Securities and Exchange Commission alleges Goldman defrauded investors by failing to disclosed conflicts of interest in mortgage investments sold during the housing market meltdown.
The SEC accused Goldman of failing to reveal that Paulson & Company, one of the world's largest hedge funds, helped create and then bet against subprime mortgage securities Goldman sold to its investors. Investors wound up losing more than $1 billion. The SEC is seeking to recoup any profits made on the deal.
In its statement, Goldman vows to contest the SEC charges, calling them "completely unfounded in law and fact."
Friday's charges come as Congress seeks a crackdown on Wall Street to avoid a repeat of the financial crisis. One of the proposals would impose tougher rules for complex investments similar to those allegedly involving Goldman.
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