Goldman to Pay $12 Million to Settle S.E.C. \'Pay to Play\' Case

Goldman Sachs on Thursday settled allegations that one of its investment bankers curried favor with a public official to win lucrative government contracts in Massachusetts.

The Wall Street bank agreed to pay roughly $12 million to settle the “pay-to-play” allegations without admitting or denying guilt. The banker, Neil M.M. Morrison, who was a vice president at the firm, did not settle. His lawyer did not return a call for comment.

The Securities and Exchange Commission said Mr. Morrison had strong ties to former Massachusetts state treasurer Timothy P. Cahill, acting as fund-raiser and speechwriter. Starting in 2008 , the S.E.C. says, Mr. Morrison began soliciting public contracts, a violation of securities laws. His lobbying was done during work hours and using the firm's e-mail system and phones.

“The pay-to-play rules are clear: municipal finance professionals that use their firm's resources to campaign on behalf of political candidates comp romise themselves and the firms that employ them,” said Robert Khuzami, director of enforcement at the commission.

Part of the fine Goldman is paying includes disgorgement of $7.5 million that Goldman earned in underwriting fees.

In a statement, Goldman said it detected Mr. Morrison's activities, flagged regulators and then terminated him. “We accept responsibility for the consequences of his unauthorized actions under the terms of the settlements announced today and are pleased to resolve these investigations.”

The S.E.C. said that the Massachusetts attorney general would file a related action against Goldman.

At one point, according to the S.E.C. complaint, Mr. Morrison acknowledged the problem, telling a campaign official in an e-mail that “I am staying in banking and don't want a story that says that I am helping Cahill, who is giving me banking business. If that came out, I'm sure I wouldn't get any more business.”

Mr. Morrison , the agency, said, highlighted his political ties when lobbying Mr. Cahill's office for business. In one e-mail to a deputy treasurer, he wrote “from my standpoint as an advisor/consultant/friend I am saying, PLEASE don't give these slots away willy-nilly,” referring to the underwriting business. “This has to be a political decision.”