Financial Regulatory Forum

BREAKINGVIEWS-Neither Goldman nor Senate makes killer case

By Antony Currie

– The author is a Reuters Breakingviews columnist. The opinions expressed are his own –

LONDON, April 26 (Reuters Breakingviews) – The U.S. Senate’s investigations unit has scored some easy political points in its study of Goldman Sachs’s subprime mortgage activities in 2007. But there is no concrete evidence of wrongdoing, or even of an excessively zealous search for profits, in the four exchanges of embarrassing emails from the Wall Street firm released over the weekend.

Still, Goldman hardly makes a killer case with its defence — that it was merely hedging risk.

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Copy of shareholder suit against Goldman Sachs, Blankfein over Abacus

Goldman Sachs Group Inc <GS.N> and Chief Executive Lloyd Blankfein were hit with a shareholder lawsuit claiming they hid key details about a risky transaction that resulted in civil fraud charges and a plummet in its stock price. Goldman Sachs Group Inc  and Chief Executive Lloyd Blankfein were hit with a shareholder lawsuit claiming they hid key details about its Abacus transaction that resulted in civil fraud charges and a plummet in its stock price.  Here is a copy of the suit.

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U.S. Senate panel releases documents on credit raters’ role in Abacus, financial crisis

The Senate Permanent Subcommittee on Investigations released a trove of internal messages and other exhibits from its look at the role credit-rating agencies played in the financial crisis, including several related to the Goldman Sachs Abacus trades at the heart of SEC fraud charges against the bank .  Reuters links to full file of exhibits.

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BREAKINGVIEWS – How Goldman Sachs fell out with the SEC

– The author is a Reuters Breakingviews columnist. The opinions expressed are his own –

By Nicholas Dunbar

LONDON, April 20 (Reuters Breakingviews) – In December 2000 I received an email from the Goldman Sachs press office in New York, nominating the firm for Risk magazine’s “Risk Manager of the Year” award. Central to the pitch was how the Wall Street bank had run a boot camp for its supervisors at the U.S. Securities and Exchange Commission, training them in concepts like value-at-risk and derivatives hedging.

It was a win-win move, both sides told me. Goldman ensured its regulator was up to date with financial innovation and earned brownie points for its efforts. By offering a “light-touch” regime for its charges, the SEC hoped to prevent the securities firms under its purview from basing their fast-growing over-the-counter derivatives operations in London.

SEC may have hard time finding other suits like Goldman

By Matthew Goldstein

NEW YORK, April 19 (Reuters) The civil lawsuit filed by securities regulators against Goldman Sachs Group from the sale of a security linked to subprime mortgages may not open the floodgates for similar enforcement actions of its kind as some believe might happen.

In fact, the case lodged by the Securities and Exchange Commission against Goldman and a 31-year-old bond salesman may prove to be more rare than initially believed, a close reading of legal documents in the matter reveals.

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SNAP ANALYSIS – Goldman charges give lift to Lincoln US swaps bill

By Roberta Rampton

WASHINGTON, April 16 (Reuters) – Bombshell fraud charges against Goldman Sachs, one of the largest swaps dealers on Wall Street, give new impetus to a tough derivatives reform bill proposed by Senate Agriculture Chairman Blanche Lincoln on Friday.

The bill must be meshed with other proposals that are part of Congressional efforts to reform the financial regulatory system. But Lincoln is now placed to play a leading role in the debate on how the final package will impact on the $450 trillion over-the-counter swaps market.

With one eye to the November mid-term elections, the bill could find support from lawmakers keen to take a stand against excess on Wall Street. But it is unclear whether the White House would support going this far.

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