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goldman charged with fraud by the SEC

  • derek bomar
    http://www.reuters.com/article/idUSTRE63F3JX20100416?feedType=RSS&feedName=topNews

    did anyone hear anything about this? I hadn't heard that they were being investigated...seems like a big deal
  • Footwedge
    derek bomar wrote: http://www.reuters.com/article/idUSTRE63F3JX20100416?feedType=RSS&feedName=topNews

    did anyone hear anything about this? I hadn't heard that they were being investigated...seems like a big deal
    Why don't you state your opinion about it? Aren't those the rules here?
  • derek bomar
    Footwedge wrote:
    derek bomar wrote: http://www.reuters.com/article/idUSTRE63F3JX20100416?feedType=RSS&feedName=topNews

    did anyone hear anything about this? I hadn't heard that they were being investigated...seems like a big deal
    Why don't you state your opinion about it? Aren't those the rules here?
    I stated my opinion
  • Footwedge
    Oh....OK... LOL.
  • I Wear Pants
    Is this really surprising?
  • LJ
    I try to spend the day shooting and everything goes to hell. I tried to post from my phone to elaborate more DB, but I guess it didn't go through.
  • Footwedge
    I Wear Pants wrote: Is this really surprising?
    I am very surprised. Especially since GS has notoriously bankrolled Dems in elections...and there is a Dem in the WH and and Dem controlled House/Senate.

    The SEC has been shown to be grossly incompetant. Happy to see this though.

    Until criminals are held to the fire, they will continue with their criminal activities.
  • Footwedge
    Oh...and I hope FFT chimes in on this. It will be very interesting to see what happens to the corporate bigwigs, since we all know that the protection of execs under corporate veil laws have changed radically over the past 15 years or so.
  • derek bomar
    Footwedge wrote: Oh....OK... LOL.
    :D

    and sorry for not elaborating...I just think it's weird to not have heard about the investigation, and then this come out, on a Frida no less...and for only one person in the org to be named specifically...it's just weird. It seems like (just a perception/feeling) that they could have done more...though I'm not entirely sure what Goldman was doing was legal or not, so I really can't say with any certainty one way or the other...

    Anyway, something isn't right when you sell a product to investors with your endorsement knowing full well they're gonna tank...so I'm glad something is being done.
  • IggyPride00
    It's only a civil complaint, so nothing will happen to management. As Dick Bove said today, "even if they are fined 2 billion dollars, GS has 65 billion cash on hand, so this is a buy". They will not get fined more than a token few hundred million if that assuming the case ever actually moves forward.

    In fact, I would bet if someone looked at Goldman's trading books close enough for the past few days they probably found a way to short their own stock and everything else that would be affected by the news of the SEC filing charges. They certainly knew ahead of time this was coming, and while they can't overtly front run their own stock on insider news they undoubtedly found a way to make money off this as they are never one to let insider info go to waste.

    If I had the money, I would be buying Goldman stock today as this is a big knee jerk reaction by the market. They are still the kings of making money hand over fist, and this will go away soon enough and the stock will resume its upward march. This will be a feel good story for government officials to make it seem like they are out for justice, but it is nothing more than a big side show because a monetary fine means nothing to the Goldman's of the world.

    Only when we start seeing criminal charges and perp walks against Wallstreet bankers will we know anyone in Washington is serious about getting justice.
  • fan_from_texas
    Footwedge wrote: Oh...and I hope FFT chimes in on this. It will be very interesting to see what happens to the corporate bigwigs, since we all know that the protection of execs under corporate veil laws have changed radically over the past 15 years or so.
    While I haven't read the complaint, this appears to be a securities issue (10b-5ish), not a corporate veil piercing issue, and I'll say with certainty that there won't be any veil piercing here. I'm not a corporate lawyer, but my understanding is that the fact that GS chose to fight this civil suit rather than settle indicates that they believe they have a good chance of winning. A lot of this will probably depend on how well GS disclosed the risks. Because all players were highly sophisticated, it'll be interesting to see how the SEC plays this one out--it's tough to claim that a party wasn't aware that someone was betting against them and shorting the other side. I guess we'll see.

    MB worked on Wall Street for awhile, so he probably will have more insight than the rest of us on this case.
  • I Wear Pants
    I'm not surprised by anything that comes out of the financial industry any more.
  • Footwedge
    fan_from_texas wrote:
    Footwedge wrote: Oh...and I hope FFT chimes in on this. It will be very interesting to see what happens to the corporate bigwigs, since we all know that the protection of execs under corporate veil laws have changed radically over the past 15 years or so.
    While I haven't read the complaint, this appears to be a securities issue (10b-5ish), not a corporate veil piercing issue, and I'll say with certainty that there won't be any veil piercing here. I'm not a corporate lawyer, but my understanding is that the fact that GS chose to fight this civil suit rather than settle indicates that they believe they have a good chance of winning. A lot of this will probably depend on how well GS disclosed the risks. Because all players were highly sophisticated, it'll be interesting to see how the SEC plays this one out--it's tough to claim that a party wasn't aware that someone was betting against them and shorting the other side. I guess we'll see.

    MB worked on Wall Street for awhile, so he probably will have more insight than the rest of us on this case.
    Oh I don't mind being double teamed again. :D
  • IggyPride00
    Little will happen to Goldman because of this episode, as Llyod has essentially admitted in public that this is par for the course on Wallstreet.

    What does it say though about how fucked up our financial situation is that it is even questionable as to whether this is techincally a crime or not.

    Goldman paid Paulson to put together a list of houses he determined to be highly likely to be foreclosed on due to the geographical region in which a home was located, credit rating of the mortgage payer, an adjustabled rate mortgage set to explode and other signs that all pointed to a huge wave of people being kicked out of their home when their rates reset and they couldn't make the payments or refinance the house.

    He designed it knowing he was going to short the crap out of it, and then Goldman turned around and sold it off to investors (mostly pension funds) knowing it was a ticking time bomb all the while never disclosing that the security was designed specifically to fail. Instead they told those investors the security was designed by an independent, objective 3rd party.

    Goldman then proceeded to goto AIG and get CDS protection on those bogus mortgage bonds they knew were going to blow up, and the American Tax Payer paid them 100 cents on the dollar for every worthless piece of paper they were responsible for originating.

    Here I thought it was against the law to take out an insurance policy on your neighbor's house, burn it down, and then collect the insurance money. Obviously not.

    The fact this case isn't even a big deal because it is par for the course in today's world of high finance should scare the shit out of every citizen of this country (R's, D's, liberals and baggers) when you consider there are hundreds of trillions of dollars of completely unregulated derivatives flying around out there and we know that zero concern is given to any collateral damage caused as long as the firm makes money.

    Hopefully this will be enough to wake up Washington to stop the bickering and get a reform bill done that eliminates these type of practices as being considered for the most part legal.
  • I Wear Pants
    ^^^ This.
  • Footwedge
    Yes John Paulson studied a way to circumvent the financial rules stating that it was illegal to short sell the artificially inflated housing bubble.

    He pulled together some lawyers and explained his plans of making billions of dollars betting that the housing markets would in fact collapse.

    Once the crumbling began, the huge investment bankers came crawling to John and his services, to hedge against this very thing. Paulson's sales and equity value of his CDS and SIV's ballooned into multi billions.

    Here is an interesting article that spells out the case, and what possible defensive strategies the SEC will face.

    http://www.dailyfinance.com/story/investing/inside-the-secs-legal-case-against-goldman-sachs/19443106/
  • CenterBHSFan
    IggyPride00 wrote: Hopefully this will be enough to wake up Washington to stop the bickering and get a reform bill done that eliminates these type of practices as being considered for the most part legal.

    Unfortunately, we've just been shown in a HUGE way, that our government has no clue what reform actually is. It still thinks that growing government is "reform".
  • IggyPride00
    Nice to see Germany may get in on the act and sue Goldman themselves. I have also read Mario Cuomo wants to take his turn with them as well.

    One of the articles I read said that Jamie Dimon made sure to have J.P Morgan set aside an extra $2.3 billion dollars for anticipated future litigation, particularly in mortgage related cases.

    Something tells me if we ever get serious about turning over more rocks we would be amazed (although at this point I doubt it) at the stuff we would find underneath. It is highly unrealistic that Goldman was the only one selling securities purposely designed to fail while at the same time insuring them to reap the rewards when they did. It would not take long for word to spread of a money making scheme guaranteed to win like that, as other firms would want to get in on the same action.

    http://news.yahoo.com/s/ap/20100417/ap_on_bi_ge/eu_germany_us_goldman_sachs
  • IggyPride00
    Goldman's response to being sued for fraud by the government along, along with scores of other defrauded governments and investors alike lined up to join the party? Bonuses for everyone....yay!

    A leading paper in the U.K this morning is reporting that Goldman plans on handing out early bonuses this year for just the first 3 months of the year to the tune of almost $5.5 billion.

    Seems kind of interesting to me the timing of such a thing to come out considering that will do nothing but enrage politicians and citizens while at the same time reinforcing that you haven't learned a thing and frankly just don't care.

    http://business.timesonline.co.uk/tol/business/industry_sectors/banking_and_finance/article7100961.ece
  • IggyPride00
    From Zero Hedge. Very very funny.

    THE LLOYD’s Prayer

    Our Chairman,
    Who Art At Goldman,
    Blankfein Be Thy Name.
    The Rally’s Come. God’s Work Be Done
    On Earth As There’s No Fear Of Correction.
    Give Us This Day Our Daily Gains,
    And Bankrupt Our Competitors
    As You Taught Lehman and Bear Their Lessons.
    And Bring Us Not Under Indictment.
    For Thine Is The Treasury,
    The House And The Senate
    Forever and Ever.
    Goldman.