GOLDMAN Sachs could not function as a market maker if it was a fiduciary, president and chief operating officer Gary Cohn said yesterday.
Executives from the bank, which is facing civil fraud charges from the US Securities and Exchange Commission, were asked by a Senate panel two weeks ago whether Goldman Sachs was conflicted in selling securities to clients and then shorting those securities.
Cohn, Goldman’s second-in-command, did not appear before the panel but used a conference in New York yesterday to defend Goldman’s role as a market maker.
He said the bank needs to be able to offset risks related to market making, in which it offers prices for sometimes-illiquid securities that may not have both buyers and sellers.
Markets would not work if market-makers were fiduciaries, he said.
Goldman’s shares have tumbled since the SEC’s probe.