Comments on: Goldman’s defense A slice of lime in the soda Sun, 26 Oct 2014 19:05:02 +0000 hourly 1 By: Kina Wed, 21 Apr 2010 11:26:52 +0000 And by the way, if the clients who lost do sue they can go for more than the initial loss. The resultant collateral damage will be collected as well.

Goldman Sachs IF they did as alleged will be up for much much more than $1bn.

By: Kina Wed, 21 Apr 2010 11:12:55 +0000 I am amazed that the putting together of a product designed to fail then sold as a worthwhile investment to a client isn’t itself fraud, or at least criminal negligence.

Goldman Sachs gets a fee from the buyer of the product, being a client. Thus GS have a responsibility that is actionable if they fail at it.

This means, regardless of the SEC charges, that those who bought and lost money on this product have a clear case just on the above information (if it is accurate).

Clients don’t have to prove fraud to sue, they only have to prove criminal negligence, a deliberate misleading of as to the facts.

It doesn’t matter what the other information is. If GS itself knew that the product was full of rubbish, toxic, very high risk items and failed to tell the client then they toast. It isn’t a defence to say that others didn’t tell the client the risk. If GS knew then they had a responsibility, being the ones offering the product, designing the product and receiving a fee for service on the product.

So it doesn’t matter how the SEC case goes, it is irrelevant to the issues the clients have.

By: randymiller Wed, 21 Apr 2010 06:01:56 +0000 The re write of trading laws at the end of the Clinton administration specifically excluded CDS from being subject to the gaming laws.

If they were still subject to gaming laws, would a transaction like this be considered gambling? Would GS have made 3 billion plus if they were still a fee based investment bank? Is Blankfein’s latest bonus in shares of stock, or so many dollars worth of stock?

The big earnings will bother a lot of people, because they believe that GS made that money by scheming and gambling with a rigged game, as opposed to making money with hard work and contributing value to the economy.

By: Storyburncom_is Wed, 21 Apr 2010 03:30:51 +0000 ABN AMRO is a big boy. They knew how CDOs are set up, with a long and short side. NOBODY knew who Paulson was back then, so ABN wouldn’t have pulled. To think that ABN AMRO misunderstood the transaction is plain stupid

By: jstaf Tue, 20 Apr 2010 19:39:21 +0000 This deal was a scam, the idea that one guy picks a collection of crappy securities that Goldman then negotiates a higher rating is fraud by any measure, don’t forget the rating part that provided GS’s main value to Paulson.

But the regulation needs to remove the speculative nonsense like CDO’s and tie risk to the investor where it belongs, the moral hazard is far too great for any individual to resist, even a basically decent man like Blankfein was so blinded he thought he was doing God’s Work.

The last financial guy I knew that said seriously just dropped a couple hits of LSD and was drinking shots of tequila. The chance to make billions with other people’s money will always result in bad outcomes.

By: Mustard Tue, 20 Apr 2010 18:12:28 +0000 The loss Goldman suffered on this deal is irrelevant because it is but one high-risk position presented outside the context of the firm’s comprehensive hedged positioning during that time period. The loss is not evidence of good faith any more than evidence that Goldman was net short the mortgage CDO market at the time would serve as evidence of bad faith.

By: Uncle_Billy Tue, 20 Apr 2010 17:26:07 +0000 Where’s Lucas van Praaaaaaahahahag in all of this? Nothing to contribute to the discussion?

By: savo Tue, 20 Apr 2010 17:20:56 +0000 >But in any case if Goldman can show that ACA knew that Paulson was short, a massive plank of the SEC case then starts crumbling. ysector/banksandfinance/7611457/Goldmans -Tourre-told-main-investor-Paulson-was-s horting.html

But Mr Palm said: “He said Paulson was interested in a transaction of this type, and wanted to take a position on the short side.”

By: DrGoose Tue, 20 Apr 2010 17:18:58 +0000 Institutional buyers of debt
Are big boys and deserve what they get,
But if some of those boys
Knew who cobbled their toys,
They may not have invested, peut-ĂȘtre?

By: dicktracy150 Tue, 20 Apr 2010 17:18:31 +0000 It seems to me that since the SEC claims that there was fraud, it is more than likely that ACA has confirmed to the SEC that they did not know Paulson was short. If the actual facts are otherwise then the SEC is going to look very foolish.