Friday, April 16, 2010

SEC charges Goldman Sachs with fraud

(Fortune) -- The Securities and Exchange Commission on Friday charged Wall Street's most gilded firm, Goldman Sachs, with defrauding investors in a sale of securities tied to subprime mortgages.

The SEC said it charged New York-based Goldman (GS, Fortune 500) and a vice president, Fabrice Tourre, for their failure to disclose conflicts in a 2007 sale of a so-called collateralized debt obligation. Investors in the CDO ultimately lost $1 billion, the SEC said.


The SEC's civil fraud complaint alleges that Goldman allowed hedge fund Paulson & Co. -- run by John Paulson, who made billions of dollars betting on the subprime collapse -- to help select securities in the CDO.

Goldman didn't tell investors that Paulson was shorting the CDO, or betting its value would fall. When the CDO's value plunged within months of its issuance, Paulson walked off with $1 billion, the SEC said.

This is just the beginning readers. This civil action will turn into criminal, after all the court findings. This process will drag out for years, making hundreds of millions for lawyers. But the bottom line is, those greedy deceitful SOB's are going to answer to thousands of investors who were taken for a ride, including the government. We can now rest knowing justice will be served as the years pass.

3 Comments:

At April 18, 2010 at 12:08 AM , Blogger John said...

I take it from what you say here that this is a good thing, but I have to ask, why is this just a civil charge and not a criminal case? These guys broke the law, right? You or I would be going to jail for a long time. Bernie Madoff bilked people out of less money than Goldman Sachs,and he is in jail. Why the different rules for these bank guyS?

 
At April 18, 2010 at 12:17 AM , Blogger Help said...

Talk to us regular guys here Jim. Like what is a CDO for starters?

 
At April 18, 2010 at 12:22 AM , Blogger Friend said...

Is this Paulson guy being charged with anything? If he was the one who did the deed, then shouldn't he be paying the price here? All of this stuff is over my head, but then, I guess that is why these guys get away with it, because most of us don't understand this stuff. What I do understand is that my 401K lost a whole bunch of value because of these guys, and they should pay for that.

 

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