« | »

SEC Shakes Down Goldman – For $550M

From a joyous Reuters:

Goldman to settle with SEC for $550 million

By Rachelle Younglai And Steve Eder Thu Jul 15, 2010

WASHINGTON/NEW YORK (Reuters) – Goldman Sachs Group Inc agreed to pay $550 million to settle civil fraud charges over how it marketed a subprime mortgage product, ending months of negotiations that rattled the bank’s clients and investors.

The U.S. Securities and Exchange Commission said the penalty was the largest ever for a financial institution, and leaves the door open for future civil suits.

Alas, once blackmailers make a score they will keep going back to the well.

But many investors viewed the $550 million settlement as just a slap on the wrist for a bank that earned more than $13 billion last year

Goldman’s shares rose more than 9 percent in late and after market trade to $152.20 on reports that the bank was close to settling and the actual announcement. The investment bank’s market value had plunged by more than $25 billion since the SEC pressed charges on April 16

But all of this nonsense was just a slap on the wrist.

The settlement leaves the door open for additional enforcement actions by the SEC and further investigation by federal prosecutors. The Department of Justice could still pursue criminal charges, although lawyers said that was unlikely.

The SEC said it planned to continue its lawsuit against Fabrice Tourre, the vice president at Goldman accused of putting the deal in question together.

And after settling with the SEC, Goldman must now fend of lawsuits from shareholders and other interested parties. Earlier this month, the investment bank asked a judge to combine 18 shareholder lawsuits in the wake of the SEC’s charges.

The settlement could spur additional shareholder lawsuits against Goldman, said Jeffrey Plotkin, a former SEC lawyer who now is an attorney at law firm Day Pitney LLP in Hartford, Connecticut…

Of the $550 million settlement, $250 million will be returned to harmed investors, and $300 million will go to the U.S. Treasury. Of the $250 million, $150 million will go to Germany’s IKB, and $100 million will go to the Royal Bank of Scotland.

Why is the US government getting $300 million? Still, it might be in Goldman’s interest to give them the money.

You can buy a lot of porn with $300 million. So the SEC might be somewhat preoccupied for the foreseeable future.

The settlement is subject to approval by a federal judge, which independent legal experts said was likely.

"I think it will be approved, given that two of the five SEC commissioners didn’t think the case should have been brought at all," said Jonathan Macey, a securities and corporate law professor at Yale University Law School.

The fact that the commission was split was evidence to many on Wall Street and even at the SEC itself that the government had a weak case.

If by ‘weak’ you mean ‘preposterous.’ Than, yes, it was a weak case.

The SEC announced the settlement during a news conference in Washington. It was announced the same day Wall Street reform cleared Congress and headed to President Barack Obama for his signature.

What a great day for those who want to destroy free market capitalism.

SEC staffers told Goldman Sachs’ management last year that they may recommend a lawsuit against the firm, but senior bank executives were still surprised when the lawsuit was filed in April.

Goldman Sachs was defiant and refused to negotiate a settlement with the regulator. But about a month after the fraud charges were filed, top Goldman officials, including the bank’s chief financial officer David Viniar, started talking to the SEC.

"At some point they shifted their attitude," said one source familiar with the negotiations.

Meaning that even the most proud and wealthy companies cannot hold out for long against a government run by thugs.

The lawsuit hinged on the narrow issue of whether Goldman failed to disclose relevant information to a client. Many competitors on Wall Street viewed the case as unreasonable.

Funny, how we only hear that in the final paragraph, isn’t it?

This article was posted by Steve on Friday, July 16th, 2010. Comments are currently closed.

7 Responses to “SEC Shakes Down Goldman – For $550M”

  1. heykev says:

    You can buy a lot of porn with $300 million. So the SEC might be somewhat preoccupied for the foreseeable future.

    At least we will know where our money is going at the SEC, unlike the stimulus package (no pun intended).

  2. Georgfelis says:

    Once you pay Danegeld, you will never get rid of the Dane.

    Once the politicians get their hard-earned greenbacks back to the house and packed into the freezer, they will be back.

  3. proreason says:

    Partners in crime – Goldman Sachs, Soros, Obama, marxists everywhere.

    No different than the businessmen who supported Hitler.

  4. hushpuppy says:

    Wait till this hits the fan:

    Goldman Sachs sets aside $9bn for pay as revenues drop

    Goldman Sachs is set to pay as much as 45pc of its 2010 revenues to its staff in a move that is likely to reignite political anger with the investment bank just days after it settled a high-profile fraud case with American regulators.

    Analysts expect Goldman to say that its closely-watched compensation ratio, which indicates the intended level of staff pay as a proportion of its revenues, is between 40pc and 45pc when it announces its second quarter results this week.

    • proreason says:

      Not to worry.

      Sachs has already bought the political criminals in charge of regulating them.

      Part of the deal is that their fellow scum can rake them over the coals perdiodically whenever they need to demonstrate their populist chops.

      Cost: a million here a million there. and eating a little crow now and again
      Benefit: billions in illegal profits, with no risk.

      Pretty good deal, isn’t it?

      And where do the profits come from? Check out the balance in your 401K in August 2008 and now. That’s where.

    • tranquil.night says:

      Their prints are all over the subprime scam from beginning with Rubin’s Community Reinvestment Act to end with Paulson’s TARP, on top of countless other sharkish schemes internationally going back all through history. Liberal conspiracy nuts chomp at the bit for theories about how GS houses the Neoconservative Shadow Elite. Ironically, they understand how the entire scheme worked but are ignorant to the fact that it was Democrats who implemented it and then provided cover for the whole mess until we were 24 hours away from financial collapse. Yes, that’s how brainless the average Libwit has gotten but it’s worse: it seems there’s still quite the populist anger (or percieved as such) at Wall Street entirely.

      Far too few understand the complex nature of the cronyism between lawless & ruthless corporate and government profiteers. They’re one and the same beast in that they’re rule-less individuals with the means and power to do great harm, exponentially so when they share the same goals and work together.

      I gave up on this debate last year. A big government verse big business tone drowned out any rational discussion of the facts of the situation. In the end I realized that roiling about the criminals in GS was missing the point. It was the abusive power of lawmakers that hatched and incubated the financial meltdown, from beginning to end; and the same criminals are still there hatching new disasters. That is truly how the dicussion needs to be centered in the public forum.

  5. hushpuppy says:

    And then there’s this:


    RBS considers suing Goldman Sachs over lost $841m
    Royal Bank of Scotland is mulling launching a civil legal action against Goldman Sachs after the US investment bank on Thursday settled a case with the US authorities relating to the misselling of complex debt products.

    RBS was awarded $100m (£65m) by the Securities and Exchange Commission (SEC) as part of a $550m settlement reached by the US market regulator with Goldman Sachs, however the UK bank is understood to be considering its own lawsuit against the investment bank to recover potentially the full $841m it lost.

« Front Page | To Top
« | »