NEW ORLEANS — The Securities & Exchange Commission's director of enforcement Robert Khuzami said the agency will look very closely at "similar deals" by other Wall Street firms that sold CDOs, backed by souring mortgages, in the lead up to the global financial crisis.

Speaking to reporters at Corporate Law Institute at Tulane University Law School, where he was a panelist Friday morning, Khuzami said the alleged fraud in the Goldman Sachs Group Inc. case was an issue of nondisclosure.

The fraud, he said, wasn't that hedge fund Paulson & Co. helped select mortgage-backed bonds that were used as collateral for the CDO, while betting that the loans were likely to decline in value. Rather, it was simply that Goldman didn't disclose this fact to ACA Capital Holdings, the CDO manager ultimately responsible for selecting the assets included in the CDO.

"Our message to brokers, banks and dealers is that you have to play fair. You have to provide full disclosure or you are going to face the consequences," Khuzami said.

Khuzami said the SEC had been investigating the Goldman 2007 CDO deal known as Abacus "for some time." He declined to say when or how the probe began. Asked whether Goldman was cooperating with the investigation, Khuzami said, "you should ask Goldman to comment on that." He declined to comment further.

Khuzami reiterated that the reason Paulson wasn't cited in the case was because Goldman alone failed to disclose that Paulson was shorting the CDO in which it helped select the collateral. "Goldman made the representations, Paulson did not," he said.

Khuzami said the SEC may seek damages and disgorgement of "ill-gotten gains" from Goldman.

Khuzami, who worked in the general counsel's office at Deutsche Bank before joining the SEC in 2009, said the agency has policies which dictate whether an SEC official has to recuse himself from a case. He declined to say whether he expected that to happen as the SEC continues its investigation into deals similar to the Goldman deal.

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