Goldman Sachs

[Graemsay]

The Vampire Squid has just been accused of fraud by the SEC over some of its deals in the subprime market.

http://ftalphaville.ft.com/blog/2010/04/16/204931/sec-charges-goldman-sachs-with-subprime-fraud/

There's been a lot of activity targeting insider trading recently in London. I wonder how much of this is an attempt to cut the too big to fail banks down to size.

The other thing is that Goldman Sachs has got a pretty rotten reputation in the public eye, and this isn't going to help. Especially with articles suggesting they loaded up some of the securities to blow up, and then took out insurance against this...

 

[cloudyday]

Civil suit. They will get a fine, and business as usual. The deal they did for their pals Paulson & Co netted them $17 billion in profits and was acclaimed as the trade of the century (shorting mortgages CDOs). A $100 million dollar fine won't be an issue, they've been in this situation before.

$100 bet they shorted their stocks before this news was released. Today's trade would probably have made them enough money to pay for their fine.

 

[Graemsay]

There was talk that the standard fine for these sorts of misdeeds is three times the profit, plus the profit itself is seized. That would be $4 billion off Goldman's bottom line, which would be a dent rather than damaging.

What will hurt them is going to be the damage done to their reputation. Would you want to do business with an institution that defrauds its customers?

I'm wondering if this, and the insider trading arrests in London, is part of a campaign by the authorities to make the point to the financial community that they're not the biggest beasts.

 

[pete_w]

There are so many factors at play here. GS as a pinup for all that's wrong with big finance. The SEC trying to get back a scrap of credibility after being so utterly useless. The vested interests in the US political system.

Now where's my popcorn maker