SEC Inspector General Will Investigate Timing of Goldman Case

Traders work in the Goldman Sachs booth on the floor of the New York Stock Exchange Monday, April 19, 2010. (AP Photo/Richard Drew)
Richard Drew

David Kotz, the Inspector General of the Securities and Exchange Commission (SEC), said today that he will investigate the timing of the decision by the SEC to instigate fraud charges against Goldman Sachs.

Some Republicans have suggested that the Goldman filing was timed to help President Obama and Democrats pass a financial industry reform bill.

"We need to understand what lead to the decision to announce or bring the case on that day, to see if there was any undue influence involved," Kotz said in an appearance on Fox News.

Kotz was responding to a letter (PDF) from Darrell Issa (R-Calif.), the top Republican on the House Oversight and Government Reform Committee. Issa has cast the circumstances of the filing against Goldman as suspicious.

The lawmaker suggested in the letter that the SEC or its employees "may have engaged in unauthorized disclosure or discussion of Commission proceedings in order to affect the debate over financial regulatory legislation currently pending before the United States Senate. "

Earlier this week eight members of the Oversight committee sent a letter (PDF) to SEC chair Mary Schapiro asking if there was "any sort of prearrangement, coordination, direction from or advance notice provided by the Commission to the Administration or Congressional Democrats regarding last Friday's filing against Goldman."

The letter said Americans "have a right to know" whether the SEC may have violated federal law by using its resources "to promote a partisan political agenda."