Financial Regulatory Forum

Senators quizzing Goldman Sachs executives yesterday seemed at least as concerned about the wider ethical issues of investment banking as they did about the actual charges that the SEC has laid against Goldman, writes John Manley. (more…)

Where the SEC goes, plaintiffs’ lawyers are sure to follow. But in the case of Goldman Sachs, they’ve charged ahead straight into the C-suite, alleging far broader levels of misdeed than the SEC’s limited charges surrounding an individual transaction, writes Erik Krusch of Thomson Reuters Westlaw Business Currents. (Click here for further details.)  (more…)

By John Manley

Three years ago, Goldman Sachs bond trader Fabrice Tourre, emailed his girlfriend Marine. Amid the amour and tendresse, “Fabulous Fab” expressed his misgivings about his job: he was conflicted about selling financial instruments that he thought were destined to fail.

Though Fab tried to rationalise his role as a small cog helping the huge engine of the capital markets operate more efficiently, he didn’t appear entirely convinced that this cleared him of any ethical responsibility.

“Anyway, not feeling too guilty about this,” Fab wrote to Marine in January 2007. “The real purpose of my job is to make capital markets more efficient and ultimately provide the U.S. consumer with more efficient ways to leverage and finance himself, so there is a humble, noble and ethical reason for my job amazing how good I am in convincing myself !!!”

  By Krista Hughes and Mark Felsenthal
   FRANKFURT/WASHINGTON, April 26 (Reuters) – Major central banks are taking on a new role of finance police in the wake of the global financial crisis but they could find their hands more tied as a result. (more…)

Did senior staffers of the U.S.  Securities and Exchange Commission watch porn on their government computers while the financial system burned? Here is a link to an SEC inspector general’s summary report, via the Washington Post, which was prepared for Republican Sen. Charles Grassely of Iowa.

(more…)

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.

(more…)

Some former government prosecutors are cheering the SEC’s case against Goldman Sachs. Some even called it a watershed event that might rehabilitate the SEC’s image, which has been tarnished in the fallout from the financial crisis and the failure to catch financial fraudsters like Bernard Madoff. Now all the SEC has to do is win its trial against Goldman, which is vowing to fight the charges, reports WG&L, from Thomson Reuters tax and accounting specialists. (more…)

    NEW YORK, April 21 (Reuters) – Goldman Sachs Group Inc <GS.N> Chief Executive Lloyd Blankfein attacked U.S. Securities and Exchange Commission fraud charges against the bank in phone calls to clients, the Financial Times said on Wednesday. (more…)

   By Svea Herbst-Bayliss
   BOSTON, April 20 (Reuters) – Clients with Paulson & Co, which was involved in a mortgage deal that prompted civil fraud charges against Goldman Sachs <GS.N>, spoke with the manager on Monday, but so far no one has notified the firm of plans to leave his fund, several investors said. (more…)

– 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.