Nine real estate investment trusts have filed to sell approximately $2.5 billion in shares since the beginning of the year, the most significant volume of deals since 2009, the Wall Street Journal reported, and the sales aren’t over yet. A $600 million offering from Pacific Investment Management and a $500 million deal by a unit of hedge fund Fortress Investment Group are both slated for the coming months.

Once one of the most desirable commodities on the stock market, reviews by the Securities and Exchange Commission could turn the tide for REITS, meaning they’ll be less likely to go public in the future.

The SEC is distinguishing between REITs that manage and operate real estate and those that invest in real estate securities, the Journal said. [more]

Fannie Mae and Freddie Mac could be close to a settlement with the
Securities and Exchange Commission, the New York Times reported, over whether the companies adequately disclosed their exposure to risky subprime loans. Under
the proposed agreement, there would be no monetary penalty or
admission of fraud. But the settlement would represent the most
significant acknowledgement yet by the mortgage companies that they
played a central role in the housing boom and bust, according to the
Times. The negotiations between Fannie and Freddie have been
going on since at least early summer, and a deal may not be realized
until later this year. The investigation, which initially included
civil and criminal elements, started three years ago. [more]

Diane Passage, a former Scores stripper and current wife of scam artist Kenneth Starr, may get thrown out of the $7.5 million Upper East Side triplex her husband bought with funds bilked from celebrity clients like Uma Thurman and Al Pacino. According to the Post, federal prosecutors are asking the couple to surrender the condominium voluntarily or else face legal action. Passage, who has been living at the Lux 74 apartment since her husband’s $50 million fraud was uncovered last May, also apparently hasn’t been paying her more than $7,000-a-month common charges to the building, a judge noted yesterday. [more]

Six months after Goldman Sachs paid $550 million to settle government fraud charges related to a mortgage deal, it’s getting hit with a second suit over the same bonds. ACA Financial Guaranty, which had held bond insurance and invested in the Abacus collateralized debt obligation, or CDO, is accusing Goldman of “fraudulent activities” for “unjust enrichment,” and is suing the firm for at least $120 million, the Post reported. The suit alleges that Abacus was “worthless” and that it was “misled by Goldman’s fraudulent activities.” [more]

Goldman Sachs has agreed to pay $550 million to the Securities and Exchange Commission to settle charges of securities fraud linked to mortgage investments, the New York Times reported. Under the settlement — the largest penalty ever paid by a Wall Street firm — Goldman will pay $300 million in fines to the Treasury Department, with the rest serving as restitution to investors in the mortgage-linked security. Goldman will not admit wrongdoing, according to the agreement, though it will concede that its marketing materials for the investment “contained incomplete information,” according to a press release from the SEC. Goldman will also change several business practices, including the way it draws up marketing materials for complex mortgage securities and the way it educates employees. The settlement must still be approved by Judge Barbara Jones of Manhattan’s Federal District Court. [NYT]

[more]

The Manhattan U.S. Attorney’s office has launched a criminal probe into whether Goldman Sachs or its employees committed securities fraud during mortgage trading, sources told the Wall Street Journal. The news comes two weeks after the Securities and Exchange Commission filed a civil securities fraud suit against the Wall Street powerhouse and one of its traders over negative bets against the housing market.
[more]

Goldman Sachs may opt to settle its fraud case with the U.S. Securities and Exchange Commission in order to avoid continued public humiliation after being grilled over whether it defrauded mortgage investors, sources told the New York Post. The investment bank, which is accused of misleading buyers and betting against the mortgage market, has endured derisive senate inquiry, after the SEC’s April 16 announcement that it had filed suit against Goldman. [more]

Fabrice “Fabulous Fab” Tourre, of Goldman Sachs

Fabrice Tourre, the French bond trader named in the Securities and Exchange Commission’s case against Goldman Sachs, lived a lavish lifestyle in a roughly $4,500-per-month apartment in New York City until 2008 when he moved to London, according to the U.K.’s Daily Mail. Tourre, 31, who was “known for his expensive tastes at Goldman Sachs,” earned more than $2 million a year while selling mortgage investment deals to investors that were destined to fail, while other clients, like billionaire hedge fund manager John Paulson, were simultaneously betting against them. Tourre, who referred to himself as “Fabulous Fab” in a e-mail to a friend cited in the SEC complaint, was also known in his “fashionable block of flats for throwing noisy parties” that irked the neighbors. Tourre was reportedly absent from work today, but Goldman Sachs said it was a “personal decision” and that he had not been suspended by the bank.
[Daily Mail via NY Mag] and [The Guardian] 

While Goldman Sachs is nabbing plenty of headlines over its recent SEC suit, its nearly-completed $2.1 billion Downtown headquarters on the corner of West and Vesey streets could draw plenty of attention too. This video from the Wall Street Journal shows images from inside the so-called “palace,” complete with a 54,000-square-foot gym and enough space to hold 7,500 employees.

It seems Goldman Sachs has larger problems than its employees’ complaints about the company’s new 200 West Street headquarters. The Securities and Exchange Commission filed a civil suit today that accuses the bank of engaging in securities fraud when it bet against a mortgage investment it was also selling to customers. The suit cites an investment called Abacus 2007-AC1, a bundle of mortgage bonds created in 2007, allegedly so that hedge fund manager John Paulson could bet against them. Paulson made an estimated $3.7 billion in 2007 on bets that the housing bubble would burst, according to the New York Times. Meanwhile, Goldman also sold the destined-to-fail Abacus deal to investors including foreign banks, pension funds, insurance companies and other hedge funds. Abacus was one of 25 deals of its kind — that is, investments created so that Goldman and certain clients could make negative bets against the housing market. [NYT]