SEC Going After GoldmanSachs

[Firebird]

http://www.nytimes.com/2010/04/17/business/17goldman.html?hp


What? You mean you can't sell investements you know are grade A, prime bull:Censor: to the hoi polloi while at the same time making bets yourself (along with a few "select") against the bull:Censor: you are pushing to pension funds and insurance companies? I don't understand why this shouldn't be legal? This is socialism interfering in the free market! I demand that the federal government stay out of Goldman's right to fleece me!

Long story short: some whiz kids at Goldman designed a mortgage investment that was designed to collapse on the poor saps who bought it for the specific purpose of making money off of said collapse.

The biggest problem: it's a civil suit and so none of these bozos are at risk of being hauled out of the offices and thrown in a paddy wagon.

In before "yeah, this is from the New York Times....:rolleyes::rolleyes::rolleyes:"

[cougmantx]

It's all over the air waves now so NYT isn't the only source. The investigation is ongoing so it will be interesting to see if criminal charges are brought.

It's an unbelievable study of capitalism gone haywire and yet there will be many defenders on here and other places stating that the government must get out of the business of regulating a free market.

Folks, it's not a free market when you are being set up for a fall before one unit of stock has been sold. It's a shell game under the guise of free markets and it's going on in all sectors.

[mad_fan]

The timing is suspect...
I don't think there are many good guys actually engaged in the regulation debate on either side...

[cougmantx]

The timing is suspect...
I don't think there are many good guys actually engaged in the regulation debate on either side...

Timing is everything sometimes...:rolleyes:

[mad_fan]

Timing is everything sometimes...:rolleyes:

The people from the government are above those types of games...;)

[E-Vol-ution]

We all know investing is basically a gamble involving risk........these guys stack the deck from the top and the side.

[cougmantx]

The people from the government are above those types of games...;)

If you really believe that (and I know you don't) I have some mortgage back derivatives I would like to sell you...:D

[mad_fan]

If you really believe that (and I know you don't) I have some mortgage back derivatives I would like to sell you...:D

I'd rather you explain how a mortgaged back derivates is structured and how it pays out and what purpose it serves...and how the trade relates to the credit default swaps...and whether or not it would require a criminal enterprise to put two different clients into two different positions in a trade or if an individual could pull it off...
:rolleyes:

[cougmantx]

I'd rather you explain how a mortgaged back derivate is structured and how it pays out and what purpose it serves...and how the trade relates to the credit default swaps...and whether or not it would require a criminal enterprise to put two different clients into two different positions in a trade or if an individual could pull it off...
:rolleyes:

First two highlighted areas, I think everyone is still trying to figure that one out. Remember, most of these contracts where set up based on mathematical equations made up by physicist (who were also looking for the god particle).

The last one, we will find out. If it is not criminal it dang well should have been. I think setting up on division whose aim it was to fail while consulting another on how to bet against it and watching a 99 percent failure rate within a few months could be construed as fraud. That's a criminal offense...isn't it? :(

[Firebird]

First two highlighted areas, I think everyone is still trying to figure that one out. Remember, most of these contracts where set up based on mathematical equations made up by physicist (who were also looking for the god particle).

The last one, we will find out. If it is not criminal it dang well should have been. I think setting up on division whose aim it was to fail while consulting another on how to bet against it and watching a 99 percent failure rate within a few months could be construed as fraud. That's a criminal offense...isn't it? :(


Unfortunately it appears not to be a criminal offense.

[mad_fan]

First two highlighted areas, I think everyone is still trying to figure that one out. Remember, most of these contracts where set up based on mathematical equations made up by physicist (who were also looking for the god particle).

The last one, we will find out. If it is not criminal it dang well should have been. I think setting up on division whose aim it was to fail while consulting another on how to bet against it and watching a 99 percent failure rate within a few months could be construed as fraud. That's a criminal offense...isn't it? :(

This is what separates (or used to separate) US from the sophisticated investors involved in this case. By definition, you and I can't buy unregistered securities because we are not smart enough. Banker(s) at one bank selling bad paper to another smart banker(s) shouldn't be our biggest concern at the moment...I'm not concerned with where all that paper that was bundled up originated...
Freddie...Fannie...the McMansion buyer...take your pick...
The SEC acts no more or less ethically than any of the players in the game...
If they had a better case (investigating since 2007) they would have brought criminal (rather than civil) charges...
Perhaps they are more concerned with expanding their powers (by influencing Congress) than they are with completing a criminal investigation...
I believe the SEC has the tools it needs now...they just hate looking bad because they feel down on the job...

[smw358]

"You can arm yourself, alarm yourself
But there's nowhere you can run
cause a man with a briefcase
Can steal more money
Than any man with a gun."

Gimme....what you got.

[mad_fan]

And buried somewhere at the NY Times...
SEC IG says the agency knew of the Stanford Ponzi scheme since 1997...
"Complex cases like Stanford's that couldn't be quickly resolved were discouraged by enforcement higher-ups, the IG's report says."
http://news.yahoo.com/s/ap/20100416/ap_on_bi_ge/us_sec_stanford

[Firebird]

Pay no attention to the people who are actually fleecing you (your pension fund)! The real enemy is the SEC!

[Favpack]

You guys are coming down hard on the Southeastern Conference. No 'Bama fans here?

:cool:

[mad_fan]

I see you still miss points...
ATTENTION ALL:
NO ONE is more able to look out for YOU than YOU...
Not even someone from the government...
If you lost your a** in a CDO or a house that was foreclosed on, and you are complaining about it, you had on business in either...

[Firebird]

I see you still miss points...
ATTENTION ALL:
NO ONE is more able to look out for YOU than YOU...
Not even someone from the government...
If you lost your a** in a CDO or a house that was foreclosed on, and you are complaining about it, you had on business in either...

Exactly. If you aren't as smart as the person who is cheating you, that means you deserve it. Hell, we should give GoldmanSachs a medal for being capitalist heros.

[mad_fan]

You guys are coming down hard on the Southeastern Conference. No 'Bama fans here?

:cool:

That SEC is the answer to everything...;)

[mad_fan]

Exactly. If you aren't as smart as the person who is cheating you, that means you deserve it. Hell, we should give GoldmanSachs a medal for being capitalist heros.

You blame the banker, car dealer, Wal-Mart greeter...
I blame to buyer...

[Firebird]

You blame the banker, car dealer, Wal-Mart greeter...
I blame to buyer...

Exactly. That's they way it should work. If you can find someone stupid enought, you should lie and cheat to get their money. If you find someone weaker than you, just beat them up and take it. Less work that way. Hell, they should have gotten their *** to a gym, or known better than to walk in your part of town.

[mad_fan]

Exactly. That's they way it should work. If you can find someone stupid enought, you should lie and cheat to get their money. If you find someone weaker than you, just beat them up and take it. Less work that way. Hell, they should have gotten their *** to a gym, or known better than to walk in your part of town.

My part of town?
It doesn't take you long does it...

If you lie and cheat you might get caught...providing someone from the government is doing their job...
Or if they happen to need a headline to cover up their shortcomings that day...

[Firebird]

Meanwhile, AIG (which sold Paulson insurance on a CDO that Paulson himself designed to go belly-up) pays Paulson and others, goes belly-up itself and promptly sticks everyone who pays taxes with the bill.

Handshakes all around for Paulson and GoldmanSachs. Well done, gentlemen. Congratulations on finding an easy mark-- American citizens. What's more, you have successfully convinced a huge chunk of them that the real problem is that government regulators want to keep a closer eye on you.

[mad_fan]

AIG...the good guy...:heli:
Or is it the less bad guy...

[mad_fan]

If you can look beyond the packaging...as in a pipe bomb...it's the contents that causes an explosion...not the packaging...

[Firebird]

More socialist problems with America...why can't I buy fire insurance against my neighbors' house? I demand "insurance modernization" akin to "commodities modernization". Socialists!

[Firebird]

If you can look beyond the packaging...as in a pipe bomb...it's the contents that causes an explosion...not the packaging...

So the point you are getting at is that I should be able to mail bombs to people, as long as I don't actually build them? This would make for an interesting society.

[mad_fan]

If a government agency can't do what it is charged with doing...it should be given expanded powers to not do it...

[mad_fan]

So the point you are getting at is that I should be able to mail bombs to people, as long as I don't actually build them? This would make for an interesting society.

You can sell gunpowder of mortgages...makes no difference to me...
Mortgages are probably more regulated...

[mad_fan]

If we see a ratings agency (like Moody's) drup into this...we'll finally be moving down the food chain where the problem originated...
I doubt we'll recover anything from original lenders or appraisers...the theives of original origin walked away long ago...

[pied]

Plenty of blame to go around, but I think this is a good thing. Rating agencies to blame as well.

[mad_fan]

Meanwhile, AIG (which sold Paulson insurance on a CDO that Paulson himself designed to go belly-up) pays Paulson and others, goes belly-up itself and promptly sticks everyone who pays taxes with the bill.


If that's more than a FB fact...funny he was charged...
I think it's closer to the truth to say that Polson approached Goldman...Goldman bundled a bunch of Freddie and Fannie crap with some good stuff...ACA reviewed the package...and a really smart bank bought it...
By law...Goldman couldn't tell the smart German bank that Paulson was a client and was on the other side of the housing bet...
A lot of people, including me, bought crap late in the housing cycle...I've made up for my bad call since getting back into the market this past spring...proof to me that the system is not rigged against me...

[drgnbkr]

I think either Alabama or Florida could take Goldman Sachs...Maybe even LSU.

[mad_fan]

Me and Mr Bloomberg have hated the SEC for a long time...
:rolleyes:

circa September 26, 2008...
The U.S. Securities and Exchange Commission failed in overseeing Bear Stearns Cos...
It is undisputable that the SEC failed to carry out its oversight of Bear Stearns Inspector General David Kotz said...
The SEC today said it will stop supervising the financial health of securities firms...
http://www.bloomberg.com/apps/news?pid=20601103&sid=aozJwG7CBGJQ&refer=us

This is not the SEC of the past...perhaps we can't afford them anymore...

[Firebird]

If that's more than a FB fact...funny he was charged...
I think it's closer to the truth to say that Polson approached Goldman...Goldman bundled a bunch of Freddie and Fannie crap with some good stuff...ACA reviewed the package...and a really smart bank bought it...
By law...Goldman couldn't tell the smart German bank that Paulson was a client and was on the other side of the housing bet...
A lot of people, including me, bought crap late in the housing cycle...I've made up for my bad call since getting back into the market this past spring...proof to me that the system is not rigged against me...

What ACA didn’t know, according to the SEC, is that Paulson’s list was of bonds the hedge fund expected to “experience credit events in the near future,” the complaint says. ACA also was unaware that Paulson intended to short, or bet against, the security that it was helping to shape. This also is the crux of the SEC’s case against Goldman: that the investment bank’s marketing materials for the Abacus offering “were false and misleading because they represented that ACA selected the reference portfolio while omitting any mention that Paulson, a party with economic interests adverse to CDO investors, played a significant role in the selection of the reference portfolio.”

That's what the whole suit is about....
http://blogs.wsj.com/deals/2010/04/16/sec-v-goldman-acas-tale-of-woe/

[mad_fan]

That's what the whole suit is about....
http://blogs.wsj.com/deals/2010/04/16/sec-v-goldman-acas-tale-of-woe/

Did they ASK? Or just sign off on the deal?

I don't think we need to criminalize bundling 100 'wheat back' Lincoln pennies...and selling them for $10...
We should criminalize giving a mortgage to someone that can't afford it...but that counter to our government policy...
I favor 20% down...fannie, freddie, VA...putting some skin in the game would change the menu...

[mad_fan]

That's what the whole suit is about....
http://blogs.wsj.com/deals/2010/04/16/sec-v-goldman-acas-tale-of-woe/

In late 2006 Paulson was the only big boy betting against the housing market...I wish I was that smart...
Again...the SEC was asleep...
I'm not encouraged by their timing (political move)...and now they've committed themselves to solving the problems of 2006 and 2007...and busting some mid level management...the frauds of 2010 and 2011 and 2012 will be unnoticed...

[slcdragonfan]

all this biatching about the SEC. Did anyone stop to think that a. perhaps they weren't properly funded and b. perhaps they had executive direction on what to pursue and what not to pursue?

Not saying it is right, but a deeper look is called for.

[ktCarl]

Meanwhile, AIG (which sold Paulson insurance on a CDO that Paulson himself designed to go belly-up) pays Paulson and others, goes belly-up itself and promptly sticks everyone who pays taxes with the bill.

Handshakes all around for Paulson and GoldmanSachs. Well done, gentlemen. Congratulations on finding an easy mark-- American citizens. What's more, you have successfully convinced a huge chunk of them that the real problem is that government regulators want to keep a closer eye on you.


Hang 'em high or out to dry!

I wish you were more vocal on the Federal Reserve's deliberate destruction of the U.S. dollar.

[pied]

Some reading material:

Their defense, Caveat Emptor

http://dealbook.blogs.nytimes.com/2010/04/19/the-goldman-defense-caveat-emptor/?partner=rss&emc=rss


The suit has a political tint to it. Vote to sue was along party lines:

http://www.bloomberg.com/apps/news?pid=20601087&sid=amvJPx_1cPwo&pos=1


Which may make it harder for the GOP to opppose the proposed regulation:

http://hosted.ap.org/dynamic/stories/U/US_FINANCIAL_OVERHAUL?SITE=FLPET&SECTION=HOME&TEMPLATE=DEFAULT


And a little more explanation of the issue:

http://www.politico.com/news/stories/0410/36018.html

[mad_fan]

4/21/10
The Paolo Pellegrini Testimony Is Devastating To The SEC

http://www.businessinsider.com/the-actually-paolo-pellegrini-testimony-is-devastating-to-the-sec-2010-4

[mad_fan]

4/21/10
The Paolo Pellegrini Testimony Is Devastating To The SEC

http://www.businessinsider.com/the-actually-paolo-pellegrini-testimony-is-devastating-to-the-sec-2010-4

[cricketts...]

[JagFan]

[cricketts...]

What's that quote about facts and slapping?

[da hawaiian]

Did they ASK? Or just sign off on the deal?

I don't think we need to criminalize bundling 100 'wheat back' Lincoln pennies...and selling them for $10...
We should criminalize giving a mortgage to someone that can't afford it...but that counter to our government policy...
I favor 20% down...fannie, freddie, VA...putting some skin in the game would change the menu...

I find it encouraging that the SEC has finally decided to go after the Bond Market. who for the longest time stood by and did little else but sue trivial people for insider trading. This suit is Revolutionary in that it goes to the core of Wall Street.

Success is secondary

[da hawaiian]

[cricketts...]

It's been clear the SEC's case was going to be difficult to make.

http://www.businessinsider.com/on-second-thought-the-sec-allegations-against-goldman-are-totally-bogus-2010-4

This suit is political like you believe and I agree, the aim by Obama's administration ofcourse is to get the Volcker Rule through Congress as is, and this was merely a move to generate momentum against the oppositon to water it down...interesting times all around

Politicised or not the Volcker Rule must pass. *wall street apologists in 1...2...3"

[da hawaiian]

Any predictions on what GS stocks will look like in the morning.

[mad_fan]

Any predictions on what GS stocks will look like in the morning.

Today...UP...with the rest of the market DOWN...

Congressmen (ie Mr Levin) are stupid...they think repeating 'crap' over and over is a demonstration of understanding of financial markets...
If you talk to them about market making, risk, exposure, liquidity...they're lost...
GS should only do deals where they LOSE money...
That's what I took from Congressional testimony today...

[mad_fan]

Oh...now according to Mr Levin...GS should ONLY SELL securities that they think will go UP...and ONLY OWN securities that they think will go UP...

So Wall Street can't beat the DOWN side???

Can't wait to see how Mr Levin makes a market...

[mad_fan]

I find it encouraging that the SEC has finally decided to go after the Bond Market. who for the longest time stood by and did little else but sue trivial people for insider trading. This suit is Revolutionary in that it goes to the core of Wall Street.

Success is secondary

Let's see what happens to the apple when you remove the core...

[cougmantx]

Let's see what happens to the apple when you remove the core...

In this case the apple is rotten all the way to the core...:eek:

[mad_fan]

Even senator McCain thinks 'doing better' in 2009 is evil...

[mad_fan]

In this case the apple is rotten all the way to the core...:eek:

From the outside in...

[mad_fan]

In this case the apple is rotten all the way to the core...:eek:

Have you bought an 'air' futures from me yet???:)

[cougmantx]

Have you bought an 'air' futures from me yet???:)

?????!

[mad_fan]

?????!

http://forums.5atexasfootball.com/showthread.php?t=62481

[mad_fan]

Senator Coburn....'We (Congress) are at fault because we don't do oversight'...:notworthy

[mad_fan]

More expost facto law coming...

10 hours 41 minutes...
:rofl:

[HUM398]

More expost facto law coming...

10 hours 41 minutes...
:rofl:


expost facto law....sounds kinky.

[cougmantx]

expost facto law....sounds kinky.

kind of like "air" futures...think I will pass...:rolleyes:

[slcdragonfan]

In one exchange, one Goldman employee refers to one e-mail as “as a way to distribute junk that nobody was dumb enough to take first time around.” The response of Jonathon Egol, a colleague of Mr. Tourre’s who designed some of the mortgage trades, was “LDL,” or “let’s discuss live,” effectively moving the discussion off record.

Another e-mail refers to a firm as “too smart to buy this junk.”

The investigation into the causes of the financial crisis, which began in November 2008, has over the past year and a half amassed evidence based on millions of documents and hundreds of interviews, Mr. Levin said.

“Historically, investment banks helped raise capital for business,” the report says; today, as the e-mails make clear, they also help diminish it.

On the one hand, there were hedge funds that lined up with Goldman to short the subprime-based securities, as illustrated by this e-mail from Fabrice P. Tourre, the midlevel trader cited in the recent charges of securities fraud made by the Securities and Exchange Commission.

[T]his list might be a little skewed towards sophisticated hedge funds with which we should not expect to make too much money since (a) most of the time they will be on the same side of the trade as we will, and (b) they know exactly how things work and will not let us work for too much $$$….

One the other were the clients who wanted to make money on subprime, depended on Goldman’s advice, and ended up losing big, exemplified by this e-mail to Daniel Sparks, former head of the mortgage trading desk at Goldman.

Real bad feeling across European sales about some of the trades we did with clients. The damage this has done to our franchise is very significant. Aggregate loss of our clients on just these 5 trades along is 1bln+. In addition team feels that recognition (sales credits and otherwise) they received for getting this business done was not consistent at all with money it ended making/saving the firm.

I'm glad they did nothing wrong.

[mad_fan]

I'm glad they did nothing wrong.

You'll have to define 'wrong' for me...
I assume it's the opposite of giving 'stated income loans' and 'no oversight'...which make the community banks and Congress right in this argument...

[slcdragonfan]

You'll have to define 'wrong' for me...
I assume it's the opposite of giving 'stated income loans' and 'no oversight'...which make the community banks and Congress right in this argument...

So what's your point? IF 3 different people rob 3 different stores and only one gets charged, the one charged is not "wrong" because the other two had city councilmen as fathers?

That's just a different 'wrong'. Do you see nothing morally reprehensible and probably illegal about deliberately selling bad paper to your clients? If it was an attorney, would it be "wrong"?

Please educate me if I misunderstand, finance like this is not my business. I understand it is complicated. I am open-minded about it, but to me it looks bad, and your argument seems to be "other people were bad too".

[mad_fan]

So what's your point? IF 3 different people rob 3 different stores and only one gets charged, the one charged is not "wrong" because the other two had city councilmen as fathers?

Generally I'd say that's exactly my position...except...
1. Robbery is ACTUALLY against the law...
2. The three (lenders, Congress and investment banks) 'robbed' ONE location...the US taxpayers wallet...

[mad_fan]

That's just a different 'wrong'. Do you see nothing morally reprehensible and probably illegal about deliberately selling bad paper to your clients? If it was an attorney, would it be "wrong"?.

Nope...
And I don't get the attorney question...

[mad_fan]

Please educate me if I misunderstand, finance like this is not my business. I understand it is complicated. I am open-minded about it, but to me it looks bad, and your argument seems to be "other people were bad too".

The investment banks are the LEAST culpable actors in the meltdown...
Here's one of our finest US Congressman...
http://wonkette.com/415060/here-is-your-consensus-good-youtube-clip-from-the-goldman-hearing