U.S. Charges Goldman Sachs With Fraud

[JohnnyMack]

http://www.msnbc.msn.com/id/36597290/ns/business-us_business/


U.S. charges Goldman Sachs with civil fraud
Civil suit claims Goldman sold securities that were designed to fail

WASHINGTON - The government is accusing Wall Street powerhouse Goldman Sachs & Co. of defrauding investors in its disclosures about securities it sold tied to subprime mortgage securities as the housing market was faltering.

The Securities and Exchange Commission announced Friday civil fraud charges against Goldman Sachs and one of its vice presidents. The agency alleges that the company marketed complex subprime mortgage securities and failed to disclose to investors that a major hedge fund had bet against the securities.

[Bourbon St Sooner]

Good Lord I thought I'd never see the day. Folks in Washington must have decided that the fire was getting too hot. There's no honor among criminals after all.

[Ike]

The suit alleged that Goldman did not tell investors "vital information" about the collateralized debt obligation, or CDO, called ABACUS. This included that a major hedge fund, Paulson & Co, was involved in choosing which securities would be part of the portfolio, and had taken a short position against the CDO in a bet its value would fall.

According to the SEC complaint, Paulson & Co paid Goldman $15 million to structure the CDO, which closed on April 26, 2007. Little more than nine months later, 99 percent of the portfolio had been downgraded, the SEC said.

If true, that sounds like they may have a case...

[Bourbon St Sooner]

Why would anybody buy anything that GS sells? We knew this stuff was going on and we know they profited off the Greece debacle with inside knowledge. How is this criminal organization allowed to continue to operate?

[SOONERKAT]

I wonder how much of this has to do with Fink and his general disdain for Goldman. With all of the business the US government is sending Blackrock's way, I figured it was only a matter of time before he convinced them to go after Goldman. Morgan better have their legal team on standby now.

[Okla-homey]

Civil fraud is not criminal fraud.

Therefore, IMHO, it may come to nothing since the defendants will surely take the Fifth as is their right if they get into anything that can be used against them in a criminal case -- which is no doubt generally the same stuff the US would have to prove if they brought criminal charges.

just saying.

[JohnnyMack]

They're still scumbags.

[Harry Beanbag]

They're still scumbags.


Yep. Plaintiff and Defendent.

[delhalew]

This is were we get treasury secretaries.

[yermom]

This is where we get treasury secretaries.

that's what i was thinking

seems like a strange move at this point

[Chuck Bao]

Goldman Sachs should be held accountable for the fraud that it perpetrated on its clients. I do not understand why this isn’t criminal. These men knew exactly what they were doing and that it was wrong. I mean packaging together a portfolio of assets with a very high chance of failure and then selling it to some clients for the sole benefit of a particular client betting on failure.

This case is worse than the previous one where research analysts were used to peddle IPOs when the analysts knew that the companies were just crap. Did Goldman Sachs learn from that? No! Do you think that the brokerage industry will learn from this current case? Probably not, unless they are made to pay and pay dearly. And, I hope that clients and responsible fund managers are angry enough to shun Goldman Sachs and others who sell purposely flawed or crappy products to unsuspecting clients.

[delhalew]

Don't get me wrong. They should get a smack down, butt his is a dog and pony show. Goldman Sachs has been pulling the strings on our gub'ment for years. Just like GE and dozens of other companies, depending on the administration.