Goldman Sachs hopes to avoid the Securities and Exchange Commission’s charge of fraud by reaching a settlement on a lesser offence and agreeing to a fine of hundreds of millions of dollars, according to people familiar with the bank’s negotiating position.

Goldman Sachs hopes to avoid the Securities and Exchange Commission’s charge of fraud by reaching a settlement on a lesser offence and agreeing to a fine of hundreds of millions of dollars, according to people familiar with the bank’s negotiating position, the Financial Times reported.

Goldman, which has been accused of civil fraud over its involvement in the sale of a mortgage-linked security called Abacus, is trying to focus settlement talks with the SEC on the less serious charge of omitting or mis-stating material facts to investors, the newspaper said.

The firm is accused of selling mortgage-related securities to investors while simultaneously involving John Paulson, the noted hedge fund manager, in choosing these securities. Paulson has made huge profits by successfully short-selling securities connected to the US housing market. It is claimed that investors would not have bought the securities had they known of Paulson's involvement.

As reported by this publication, the Goldman Sachs affair has tarnished its wealth management business, prompting some figures in the industry to suggest that some of the firm’s wealthy clients could defect.

Goldman has vigorously denied charges of fraud.

The newspaper said that a lesser charge will cut the risk of Goldman Sachs being sued by investors. Already, a number of lawyers have said that there is a high chance of lawsuits being brought by disgruntled investors.

The publication said that Goldman Sachs has declined to comment. It could not be reached by WealthBriefing at the time of going to press.

(To view this publication's editorial on the matter, click here. To view a report on the impact on Goldman Sachs' wealth business, click here.)