Friday, April 16, 2010

Breaking: Goldman Sachs Group Inc. Sued for Fraud on Mortgage-backed CDOs

The SEC finally decides to enforce the law... what a novel idea

Surprise of surprises. It appears the U.S. Securities and Exchange Commission may have finally "grown a pair." Bloomberg.com reported about an hour ago that the SEC has sued Goldman Sachs for fraud, in connection with its Collateralized Mortgage Debt Security Scam (click the foregoing link even if you don't click any of the others on this page), which during the past year brought the world economy to its knees. Here's the lede from this morning's beaking Bloomberg.com story:
April 16 (Bloomberg) -- Goldman Sachs Group Inc. was sued by U.S. regulators for fraud tied to collateralized debt obligations that contributed to the worst financial crisis since the Great Depression.
The firm’s shares tumbled as much as 16 percent and financial stocks slumped.
Goldman Sachs misstated and omitted key facts about a financial product tied to subprime mortgages as the U.S. housing market was starting to falter, the Securities and Exchange Commission said in a statement today. The SEC also sued Fabrice Tourre, a Goldman Sachs vice president.
Read the full writeup here:
Goldman Sachs Sued by SEC for Fraud Tied to CDOs
After sitting on its thumbs for over a year, it would appear that the SEC has finally gotten off its neoCON ass, and decided, however belatedly, to discharge its duty as the primary U.S. securities market regulator, and to actually enforce the law.

What a novel idea.

10 comments:

Anonymous said...

I would like to know if Mr. Warren Buffett
sold his shares of GS prior this announcement.

Danny said...

Goldman Sachs, the gummint's broker, bailed out by the gummint with billions that flowed directly to it's executive bonus program, the "vampire squid attached to the face of humanity", the company that was selling mortgages to others at the same time they were betting against them with their own money, has been charged?

Hahahahahaha!

Here's another good one.

General Electric Fraud

I essence, GE told the public its loan portfolio was "robust" at the same time it was telling the gummint it could not sell it's debt and could collapse!

We learn this in reading Bush Treasury Secretary Paulson's book!

Cut secret deals, then talk about them in your book.

Hahahahahaha! What a moron!

Curmudgeon said...

I'm just a little confused. Isn't what the SEC alleges some decision makers at Goldman-Sachs did criminal conduct? And if it is, why is the remedy a lawsuit instead of a criminal charge?

Whatever fine may be ultimately assessed in civil court on the company isn't going to change the behavior of corporate management much. But if some of the decision makers [and yes, I mean CEOs] at AIG, Goldman-Sachs, etc. ended up behind bars, it might well affect the willingness of financial sector CEO's to play fast and loose with other people's money [and the economic stability of the nation as a whole] in the future.

Why civil but not criminal procedures? Maybe there's a reason. If so, I'd like to know what it might be.

law breaker not law maker said...

Earthquake tonight on abc4news at 10:00. This will be a big earthquake.
Just watch.

Dorothy Littrell said...

Curmudgeon:

Since the fraud was possibly committed in downstate New York the New York Attorney General has to be the one to bring any criminal charges against Goldman.

This first charge of fraud is by the Securities and Exchange Commission who found abuse but are not the agency which will prosecute any criminal charges against Goldman.

This will probably go on for months.

I want to see John Paulson charged criminally. He is the guy who made billions with his ETF Gold Fund because he had to have had prior knowledge of Goldman's fraud in order to pull off what he has done with his Fund.

The problem is that he was and is not an officer in Goldman but was probably part of the loop who knew what was going on. That will take time and efffort for somebody to prove.

Everybody in world financial markets either worked for or knows somebody who did or does and there are a lot of mouths and ears in that financial world.

That really big financial world is an old boys club and now the gals are a part of it, too.

Somebody can always be bought for a price.

I think this is where Congressmen and Senators got the idea of how to do what they do.

RudiZink said...

Curm: It's fairly common for a criminal action to be preceded by a civil suit, especially in the securities trading arena. Now that the SEC lawsuit has been filed, there will be massive pretial civil discovery in this case. During the course of discovery of course, a wealth of supporting documents will be revealed; and you can be assured that legions of minor in-the-know minor players will be "turning States' evidence (snitching)," in exchange for prosecution immunity. And if the misconduct revealed through pretrial discovery rises to the level which would support criminal indictments against top-tier GS officers, you can bet your boots that the folks in various government prosecutors' offices... from the local New York DA to the US Attorney General's Office will be champing at the bit to file criminal complaints, assuming there's enough evidence to support the criminal "proof beyond a reasonable doubt" standard.

Now that GS has been sued in court, there's "blood in the water;" and I'll expect that you can expect to see more than one GS criminal indictment coming up from prosecutors trying to cement their crime-fighting reputations within their own jurisdictions during this election year.

Gets interestinger and interestinger, dunnit?

heheheh...

Ernie the Attorney said...

Exactly right, Rudi. Local NY prosecutors will be able to secure their crime fighting reputations for a lifetime, by sending even a few of these Goldman-Sachs reprobates to the joint.

oldguy said...

Hey Rudi, this is off the thread but I'm surprised there isn't a mention of last nights open space meeting - several regular contributors to WCF were in attendance and I thought I'd see a line started. Not a criticism of the blog or its contributors - just wondering.

Curmudgeon said...

Old Guy:

Some comments on the open space meeting two threads below.

i.e., here and here.

googlegirl said...

Going After Goldman: A Crackdown on Financial Crime or a Kabuki Play Maneuvre to Avoid Bringing Criminal Charges

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