Goldman Sachs was charged with misleading investors US bank Goldman Sachs has agreed to pay $550m (?56m) to settle civil fraud charges of misleading investors.
The charges concerned Goldman's marketing of mortgage investments as the US housing market faltered.
US finance watchdog the Securities and Exchange Commission said it was the biggest fine for a bank in its history.
The UK's Royal Bank of Scotland, which is now 84% owned by the UK taxpayer and lost about $840m in investments, will receive $100m compensation.
German bank IKB Deutsche Industriebank will receive $150m, with the remaining $300m going to the US Treasury.
Terms of the settlement are subject to approval by a federal judge.
The SEC said Goldman had acknowledged that marketing material contained "incomplete information".
In a statement, Goldman did not admit legal wrongdoing but said the move was "the right outcome for our firm, our shareholders and our clients".
Despite the record fine, Goldman shares rose by 4.5%, reflecting the fact that many analysts felt the firm had got off lightly.
"They pay $550 million and they get an $800 million pop in their stock price... they got off easy," said Kevin Caron at Stifel, Nicolaus & Co.
Goldman made a profit of $3.5bn in the first three months of this year.
Housing collapse
In April, the SEC charged Goldman with failing to disclose "vital information" that one of its clients, Paulson & Co, helped to choose which securities were packaged into a mortgage portfolio that was then sold to investors in 2007.
It claimed Goldman did not disclose that Paulson, one of the world's largest hedge funds, had bet that the value of the securities would fall.
The SEC alleged that investors in the mortgage securities, packaged into a vehicle called Abacus, lost more than $1bn (?50m) in the US housing market collapse.
Goldman, arguably the world's most prestigious investment bank, had escaped relatively unscathed from the global financial meltdown.
