SEC/Goldman Sachs (GS) Settlement Rumor Dismissed, But Shares Remain Strong

In response to earlier rumors, sources told Reuters that the SEC and Goldman Sachs (NYSE: GS) have not reached a deal on a settlement over civil fraud charges related to the Abacus CDO.

Shares of Goldman Sachs are up 4.4% currently, only backing off slightly since the Reuters report.

Goldman Sachs has seen its stock drop 24% since the SEC fraud charges were announced on April 16th. The SEC said Goldman defrauded clients by not disclosing to them that John Paulson's hedge fund was short and helped create the CDOs that Goldman sold.

In addition to the settlement rumors, some investors that were selling into the passage of the financial reform bill are now buying after it was passed in the Senate. This is the "sell the rumor, buy the news" trade.

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