Wall Street giant Goldman Sachs & Co. has agreed to pay $550 million to settle civil fraud charges.
The U.S. Securities and Exchange Commission alleged the company sold mortgage-related investments that had been improperly influenced by a client.
"We believe that this settlement is the right outcome for our firm, our shareholders and our clients," Goldman's statement said.
Approximately $300 million of the settlement will be as fines paid to the SEC. The rest will go to compensate clients who lost money on their investments.
"Even if the penalty was lower than the market expected, the fact that Goldman admitted that it made misleading and incomplete disclosures to its clients vindicates the SEC's legal theory for the future," said John Coffee, a securities law professor at Columbia University. "You have to understand that the defendant almost never makes such a concession in SEC settlements."
It is the largest penalty a Wall Street company has ever paid to the commission.