UPDATE 3-Goldman shares rise on false SEC settlement rumor

* Goldman shares up as much as 5.4 percent

* Shares rise on rumor of SEC settlement-analyst

* Goldman, SEC decline to comment

* Goldman, SEC have not settled -Washington sources

* KBW Banks index up 2.6 percent
(Updates market activity)

NEW YORK, May 21 (BestGrowthStock) – Goldman Sachs Group Inc (GS.N: )
shares rose as much as 5.4 percent on Friday on rumors of a
possible settlement with U.S. regulators and a feeling that the
stock could be oversold.

The shares were up 3.5 percent at $140.80 in afternoon
trading on the New York Stock Exchange, off an earlier high at
$143.44. Goldman’s share rise came as bank stocks reversed
losses and rose shortly after the open. [ID:nN21144360]

Goldman shares were further helped by a broader rally that
sent the KBW Banks index (.BKX: ) up 2.6 percent. Goldman’s rival
Morgan Stanley (MS.N: ) (Read more about the money market today. ) was also up, gaining 4.84 percent.

Goldman Sachs and the SEC declined to comment.

But Washington sources familiar with the matter said the
SEC and Goldman Sachs have not reached a settlement.

The SEC has accused Goldman of creating and marketing a
debt product linked to subprime mortgages without telling
investors that a prominent hedge fund helped choose the
underlying securities and was betting against them.

Market sources confirmed that the early jump in Goldman
shares — following Thursday’s slump in U.S. stocks (Read more about the stock market today. ) — was
based on rumors that the bank might be close to a settlement
with the U.S. Securities and Exchange Commission and because
the stock is oversold.

Zero Hedge first reported rumors of a Goldman-SEC
settlement were spreading through Wall Street.

“We are seeing some signs that we may be close to a
settlement. I think that the key here is conciliatory comments
that we’ve been hearing from the CEO of Goldman, Lloyd
Blankfein, where he’s taken a far more apologetic tone to what
has happened,” said David Dietze, President and Chief
Investment Strategist at Point View Financial Services in
Summit, New Jersey.

Blankfein told India’s Economic Times on Friday that he
regrets participating in transactions that “brought too much
leverage into the world.” [ID:nSGE64K02U]

“He’s basically admitting that they didn’t do some things
as well as they could have and that is suggesting that there is
some posturing to be able to come to an accord with the SEC,”
Dietze said.

Salem, Massachusetts-based Cabot Money Management fixed
income manager William Larkin, who owns Goldman bonds, said
Goldman stock has been oversold.

“Goldman has been oversold, and the bonds have been
widening pretty substantially the last couple days,” he said.

Stock Market Advice

(Reporting by Clare Baldwin, Jonathan Spicer, Rachelle
Younglai, Joe Rauch and Edward Krudy, editing by Matthew Lewis,
Leslie Gevirtz)

UPDATE 3-Goldman shares rise on false SEC settlement rumor