SEC Files Fraud Charges Against Goldman Sachs

#1
Velo Vol

Velo Vol

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#1
NY Times:

Goldman Sachs, which emerged relatively unscathed from the financial crisis, was accused of securities fraud in a civil suit filed Friday by the Securities and Exchange Commission, which claims the bank created and sold a mortgage investment that was secretly devised to fail.

The move marks the first time that regulators have taken action against a Wall Street deal that helped investors capitalize on the collapse of the housing market. Goldman itself profited by betting against the very mortgage investments that it sold to its customers.
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One wonders why it took so long.
 
#2
#2
Comical:
“We certainly did not know the future of the residential housing market in the first half of 2007 anymore than we can predict the future of markets today,” Goldman wrote. “We also did not know whether the value of the instruments we sold would increase or decrease.”

The letter continued: “Although Goldman Sachs held various positions in residential mortgage-related products in 2007, our short positions were not a ‘bet against our clients.’ ” Instead, the trades were used to hedge other trading positions, the bank said.
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The firm really had no idea, it just happened to bet a few billion that the housing bubble would pop.
 
#4
#4
goldman disclosed they may be long and short any of these positions. the only reason they got burned in this case is their guy lied about who was selecting the securities. so the question is who is the problem? goldman or the idiots that read the disclosures and conflicts and still bought the stuff for their investors?
 
#8
#8
Velo Vol said:
GS discloses all its positions?
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no they disclosed they might be long or short these positions meaning they did not say it was a good investment. And since they apparently kept an equity portion they obviously didn't think it would crap out
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#9
#9
It's amazing to me that the only person that has served prison time for unethical financial behavior the last two years is Bernie Madoff.
 
#10
#10
rjd970 said:
It's amazing to me that the only person that has served prison time for unethical financial behavior the last two years is Bernie Madoff.
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mozillo should definitely be in jail. Not sure others really did anything that is illegal.
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#12
#12
agreed. for some reason, for instance, you can invest in bonds based on inside information. do that in stocks and you get a guarenteed jail term. the hedge funds are 100% allowed to get away with bloody murder and that needs to be changed. they need to register with the SEC just like everyone else. the banks on the other hand are getting hammered far more than deserved IMO>
 
#13
#13
how many former GS associates are working in the Obama administration?
 
#15
#15
droski said:
agreed. for some reason, for instance, you can invest in bonds based on inside information. do that in stocks and you get a guarenteed jail term. the hedge funds are 100% allowed to get away with bloody murder and that needs to be changed. they need to register with the SEC just like everyone else. the banks on the other hand are getting hammered far more than deserved IMO>
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Soros is cleaning up in America (as he did in eastern Europe after the colapse of the USSR, raping national economies) by buying up banks being closed down by the FDIC under the auspices of the Federal Reserve.

Our Tennessee senator Coker asked Bernanke, chairman of the fed, if what he proposed was 'nationalization' of all the banks and Bernanke replied with a huge chessire cat smile; "no we mean to privatize the banking industry."

So I can only assume that Coker doesn't understand that the federal reserve is a privatly owned enterprise, 60% of which is owned by European oligarchs.

One of their top guys once remarked that only one in a million could understand how the system worked and there would be no threat from that segment since all of those would be either so indebted to it or so dependent upon income from it, that they wouldn't object.

I can't understand how one in a million can't understand how this rippoff works, but that's just me I guess.

As one man has said; "convincing the American people that they have been robbed of $15 trillion is going to be a tought proposition."
 
#18
#18
#20
#20
Velo Vol said:
Specifically what element of it?
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Pretending that GS clients had no idea that GS and other clients were betting the opposite direction.

I know one of the largest investors in ACA and they damn well know. This whole thing is trash.
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#23
#23
BigPapaVol said:
Pretending that GS clients had no idea that GS and other clients were betting the opposite direction.
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It's not just that the clients were betting in the other direction, it's that GS knew Paulson was picking out garbage mortgages, yet it "did not disclose Paulson's adverse economic interests or its role in the portfolio selection process in the term sheet, flip book, offering memorandum or other marketing materials provided to investors."
 
#25
#25
Velo Vol said:
It's not just that the clients were betting in the other direction, it's that GS knew Paulson was picking out garbage mortgages, yet it "did not disclose Paulson's adverse economic interests or its role in the portfolio selection process in the term sheet, flip book, offering memorandum or other marketing materials provided to investors."
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sounds sensible.
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