“What’s in the cookie batter?” she wanted to know. “Lots of sugar,” he said. “Just remember I’m not responsible if you don’t like them.”
Goldman Sachs charged with fraud by SEC “These charges are far more severe than anyone had imagined,” and suggest Goldman teamed with “the leading short-seller in the industry to design a portfolio of securities that would crash,” said John Coffee, a securities law professor at Columbia Law School in New York. (Reuters)
Abacus Allowed Goldman to Shuffle Mortgage Risk Like Beads “The SEC said that Goldman Sachs created and sold Abacus 2007-AC1 without disclosing that hedge fund Paulson & Co. helped pick the underlying securities and also bet the CDO would default. Paulson was proved correct, and his hedge fund eventually turned a $1 billion profit and CDO investors lost a similar amount, according to the SEC.” (Bloomberg)
The product was new and complex but the deception and conflicts are old and simple. Goldman wrongly permitted a client that was betting against the mortgage market to heavily influence which mortgage securities to include in an investment portfolio, while telling other investors that the securities were selected by an independent, objective third party.
Quotation from SEC Enforcement Director Robert Khuzami
