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Thread: Goldman Sachs settles with SEC

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    Re: Goldman Sachs settles with SEC

    Quote Originally Posted by drz-400 View Post
    There was always going to be a settlement in this case, only the terms were up for changing. They did not admit a crime in the settlement. They admitted that the inaccurate statements were material as a part of the settlement and paid back the parties involved pretty much in full.
    Yes, they settled because those 'innaccurate statements' were made in a misleading fashion. In other words, they KNEW that those derivatives were worthless, but sold them anyway. That's pretty well the definition of fraud.

    You have to consider who this case came out tilted against. You say the $550 mil was chump change, so does that mean goldman came out on top, avoiding charges of outright fraud? Or maybe the fine was big enough, and the fact that goldman had to admit that its inaccuracies and failure to disclosure meant material losses, and the SEC won the case.
    Ok, let's say that the 550mil essentially repaid back everyone... that's forgetting the capacity of banks to loan out ten times the amount that they are holding. So, they got to work with 5 billion dollars because of this fraudulent documenting practices.

    Also, it's neglecting the fact that these are equally CRIMINAL charges, that should have seen the CEO's facing jailtime.

    Personally, I think since the SEC came out on top, making goldman admit the inaccuracies were material and making them repay in full. However, that does not change my opinion that the case against goldman was weak, look at my analogy. I think what goldman did was wrong, was not the best practice, but would have made little difference in the end for the parties involved.
    And they profited of their crime. It's ok, they are 'too big to fail' so they can do what they want.

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    Re: Goldman Sachs settles with SEC

    Quote Originally Posted by BmanMcfly View Post
    Yes, they settled because those 'innaccurate statements' were made in a misleading fashion. In other words, they KNEW that those derivatives were worthless, but sold them anyway. That's pretty well the definition of fraud.
    They did not know anything was worthless. They failed to disclose certain information, like saying paulson was going short. Thats it.

    Here is what happened, paulson came to goldman and said, I want to go short in these particular securities.

    Goldman creates a CDO to sell.

    Goldman finds someone willing to buy these securities, if a third party selects the underlying assets.

    Goldman hires a third party, ACA, who is a specialist with these type of securities. They along with paulson select the underlying assets.

    ACA, IKB, and some others go long in this security without knowing that Pauson was going short.

    The problem came about because goldman never told ACA that paulson was going short. They allegeged a conflict of interest and a failure to disclose material information. Goldman has admitted this was wrong, and repayed in full and will change its practices.

    Personally, I think that had ACA and IKB known paulson was going short, it would have made little difference at the time since he was essentially a nobody, and ACA and IKB were specialists, and ACA was itself involved in selecting the underlying assets.

    Ok, let's say that the 550mil essentially repaid back everyone... that's forgetting the capacity of banks to loan out ten times the amount that they are holding. So, they got to work with 5 billion dollars because of this fraudulent documenting practices.
    GS was the underwriter in this particular deal. Think of them as getting broker fees for the deal.

    Also, it's neglecting the fact that these are equally CRIMINAL charges, that should have seen the CEO's facing jailtime.
    Goldman is a corporation, their CEO's have limited liability.



    And they profited of their crime. It's ok, they are 'too big to fail' so they can do what they want.
    How did they profit from this deal?

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    Re: Goldman Sachs settles with SEC

    Quote Originally Posted by danarhea View Post
    That fine is about 2 days of profits. I don't think that is going to teach Goldman-Sachs any lesson at all. LOL.
    Which is ridiculous in the first place. Goldman did nothing wrong. The German bank that got screwed totally failed to its due diligence. That's not Goldman's fault.
    "If your opponent is of choleric temperament, seek to irritate him." - Sun Tzu

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    Re: Goldman Sachs settles with SEC

    Quote Originally Posted by drz-400 View Post
    They did not know anything was worthless. They failed to disclose certain information, like saying paulson was going short. Thats it.
    Which isn't GS's fault. They didn't know they were worthless because they never took the time to look.

    ACA, IKB, and some others go long in this security without knowing that Pauson was going short

    The problem came about because goldman never told ACA that paulson was going short. They allegeged a conflict of interest and a failure to disclose material information. Goldman has admitted this was wrong, and repayed in full and will change its practices.
    That's irrelevant. Paulson going short does not impact the underlying value of the securities in any way. The collaterized securities were garbage independent on Paulson's actions. ACA and IKB did not do their diligence. And I believe GS did not hide anything relevant about the value of the securities themselves. What Paulson did is irrelevant to what the investors should have done. I believe the German bank had a totally moronic policy of treating all subprime as the same. I have no sympathy for them. They failed to do what was necessary to examine the underlying assets and got burned. Paulson going short is completely irrelevant to the investors' responsibilities.

    The government should have never fined GS or even brought this to court.
    "If your opponent is of choleric temperament, seek to irritate him." - Sun Tzu

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    Re: Goldman Sachs settles with SEC

    As long as so called "banks" are allowed to deal in derivatives and other such shady "investments" this kind of criminal activity will continue. It is "fruit of the poison tree".
    Be nice, I'm old and not too bright. But then I wasn't so bright when I was young.
    I am not an ideologue - those darn ideologies are killing us

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