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DOJ Continues to Investigate Goldman's Role in U.S. Treasury Auctions

June 8, 2017

[Photo: Goldman NYSE Booth; by Justin Lane / EPA file]


by Howard Haykin


With all the investigations and controversies playing out in Washington, D.C., it’s easy to lose sight of the Department of Justice’s investigation into possible rigging of, or collusion in, the U.S. Treasury auctions.


Goldman Sachs first revealed in 2015 that it was being investigated, in large part due to its remarkable winning streak. The firm won almost all competitive auctions for U.S. Treasury bonds from 2007 to about 2011. Apparently, there are chats and emails that may show Goldman traders sharing sensitive price information with traders at other banks. At least 4 of those other banks –UBS, BNP Paribas, RBS, and Morgan Stanley –received subpoenas last month, an indication that the investigation is progressing. And more subpoenas may be issued, given the fact that there were 20 or so primary dealers who participated in the auctions.


Yet, notwithstanding any new directions that the Department of Justice may take in its investigation, all eyes remain focused on Goldman Sachs. Which can get dicey, particularly for Gary Cohen, Steve Mnuchin and Donald Trump, should any allegations of wrongdoings stick to the firm.


  • Gary Cohn, the current director of the National Economic Council for Donald Trump, was President and COO of Goldman during the period under investigation. In that role he oversaw the unit of the firm that submitted bids to the Treasury.


  • Steve Mnuchin, another Goldman alumni, is presently Secretary of the U.S. Treasury.


  • For Donald Trump, any new scandal – particularly one involving Goldman - would throw havoc into his administration, which relies heavily on Goldman Sachs alumni. A markets scandal would further disrupt Trump’s plans to defang Dodd-Frank and loosen banking regulations.


Stay tuned. In this administration, Truth is stranger than Fiction.