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Thread: Goldman Sachs settles with SEC

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    Goldman Sachs settles with SEC

    Excerpted from “Goldman Sachs settles with SEC” By Francesco Guerrera, Henny Sender and Justin Baer in New York, Financial Times, Published: July 15 2010 21:14 | Last updated: July 16 2010 15:52
    Goldman Sachs agreed on Thursday to pay a lower-than-expected $550m fine to settle US regulators’ accusations that it misled investors in a mortgage-backed security – a move that ends the highest profile regulatory case since the crisis.

    Although the penalty is the biggest levied on a Wall Street bank, it amounts to around a week’s worth of trading revenues for Goldman and is below the $1bn fraud the Securities and Exchange Commission had alleged in its complaint in April.

    Goldman also succeeded in persuading regulators to move the settlement away from civil fraud accusations to focus on its admission that the marketing materials for the collateralised debt obligation “contained incomplete information”.

    The bank said it was a “mistake” to state that the loans contained in the CDO had been selected by a third party without mentioning the role of Paulson & Co, a hedge fund that bet against the security.

    Goldman, which had denied the SEC accusations, did not admit or deny the charges, as it is customary in these cases, but did pledge improvements to its internal practices and controls. …
    It seems like both sides blinked. The government obtained an admission that Goldman Sachs misled its customers instead of the outright fraud contained in the complaint and barely half of the proposed fine. I guess one could call that good lawyering on both sides but it reaffirms my sense that the little guy stands not one chance on Wall Street.
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    Re: Goldman Sachs settles with SEC

    Should have been fined 10 times that amount, that might have then been taken that the Government actually means business.
    The amount they were fined is merely a tickle.

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    Re: Goldman Sachs settles with SEC

    Quote Originally Posted by Chappy View Post
    It seems like both sides blinked. The government obtained an admission that Goldman Sachs misled its customers instead of the outright fraud contained in the complaint and barely half of the proposed fine. I guess one could call that good lawyering on both sides but it reaffirms my sense that the little guy stands not one chance on Wall Street.
    That fine is about 2 days of profits. I don't think that is going to teach Goldman-Sachs any lesson at all. LOL.
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    Re: Goldman Sachs settles with SEC

    Since our government is pretty much owned by Goldman Sachs, it came as no surprise to me at all.
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    Re: Goldman Sachs settles with SEC

    Quote Originally Posted by Chappy View Post
    It seems like both sides blinked. The government obtained an admission that Goldman Sachs misled its customers instead of the outright fraud contained in the complaint and barely half of the proposed fine. I guess one could call that good lawyering on both sides but it reaffirms my sense that the little guy stands not one chance on Wall Street.
    This was the largest penalty ever paid by a wall street firm and I am not sure who you could call the little guy here. Regardless, the case against GS is akin to a car dealership selling a car to a mechanic and failing to disclose that the person who sold it to them said it has started to burn a lot of oil.

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    Re: Goldman Sachs settles with SEC

    What Goldman Sach's did is done all day on wall street, there was nothing illegal about it both the government and GS knew that. What needs to happen is a change of atmosphere on wall street, not a witch hunt on GS.

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    Re: Goldman Sachs settles with SEC

    Quote Originally Posted by drz-400 View Post
    This was the largest penalty ever paid by a wall street firm and I am not sure who you could call the little guy here. Regardless, the case against GS is akin to a car dealership selling a car to a mechanic and failing to disclose that the person who sold it to them said it has started to burn a lot of oil.
    Umm... there are laws concerning 'proceeds from crime'... I'm pretty sure it gets used alot against drug dealers, but really... open and pre-meditated fraud.

    Crime does pay in america.

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    Re: Goldman Sachs settles with SEC

    Quote Originally Posted by BmanMcfly View Post
    Umm... there are laws concerning 'proceeds from crime'... I'm pretty sure it gets used alot against drug dealers, but really... open and pre-meditated fraud.

    Crime does pay in america.
    I think those involved with the deal got repaid in full, and the SEC got money as well. Anyways, the fraud allegations were dropped. I think the case against goldman was fairly weak, but that does not mean I think what happened was right, just not illegal. Of course the statement did say the information goldman failed to give was material, so I guess I could be wrong. I just think at the time it would have made little difference to those invovled if goldman had disclosed paulson was involved in selecting the assets.

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    Re: Goldman Sachs settles with SEC

    Quote Originally Posted by drz-400 View Post
    I think those involved with the deal got repaid in full, and the SEC got money as well. Anyways, the fraud allegations were dropped. I think the case against goldman was fairly weak, but that does not mean I think what happened was right, just not illegal. Of course the statement did say the information goldman failed to give was material, so I guess I could be wrong. I just think at the time it would have made little difference to those invovled if goldman had disclosed paulson was involved in selecting the assets.
    Actually, a big company like Goldman would be worth fighting to protect legitimate earnings, that they made a deal is an admission of guilt, but you admit to a lesser crime. You don't admit to a crime if you're innocent, unless you don't have the money to put up a fight, which I don't think applies this time.

    Then, you consider the number of times the crime had been done before being caught for that crime. So, the 550 million is peanuts to these guys.

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    Re: Goldman Sachs settles with SEC

    Quote Originally Posted by BmanMcfly View Post
    Actually, a big company like Goldman would be worth fighting to protect legitimate earnings, that they made a deal is an admission of guilt, but you admit to a lesser crime. You don't admit to a crime if you're innocent, unless you don't have the money to put up a fight, which I don't think applies this time.

    Then, you consider the number of times the crime had been done before being caught for that crime. So, the 550 million is peanuts to these guys.
    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.

    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.

    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.

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