Goldman's SEC fraud charged set up to avoid states' right to sue!

[Monkeypox]

http://news.yahoo.com/s/ap/20100416/ap_on_bi_ge/us_sec_goldman_sachs_charged

WASHINGTON – The government has accused Goldman Sachs & Co. of defrauding investors by failing to disclose conflicts of interest in mortgage investments it sold as the housing market was faltering.

The Securities and Exchange Commission announced Friday civil fraud charges against the Wall Street powerhouse and one of its vice presidents. The agency alleges Goldman failed to disclose that one of its clients helped create — and then bet against — subprime mortgage securities that Goldman sold to investors.

Investors in the mortgage securities are alleged to have lost more than $1 billion, the SEC noted.

The Goldman client implicated in the fraud is one of the world's largest hedge funds, Paulson & Co., which paid Goldman roughly $15 million for structuring the deals in 2007.

Goldman Sachs shares fell more than 10 percent after the SEC announcement.

The civil lawsuit filed by the SEC in federal court in Manhattan was the government's most significant legal action related to the mortgage meltdown that ignited the financial crisis and helped plunge the country into recession.

A Goldman Sachs spokesman didn't immediately return a call seeking comment.

The agency also charged a Goldman vice president, Fabrice Tourre, 31, who it said was principally responsible for devising the deal and marketing the securities.

The SEC is seeking unspecified fines and restitution from Goldman Sachs and Tourre.

"The product was new and complex, but the deception and conflicts are old and simple," SEC Enforcement Director Robert Khuzami said in a statement.

"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."

[Dig]

http://www.marketwatch.com/story/goldman-ties-to-insider-case-reveal-wall-street-2010-04-15?reflink=MW_news_stmp

NEW YORK (MarketWatch) -- Goldman Sachs Group Inc.'s role in the Galleon hedge fund insider-trading probe is great headline fodder, but the takeaways from the case shed light on an industry-wide issue.

Rajat Gupta, a current Goldman (GS 161.51, -22.76, -12.35%)  director and former head of
McKinsey & Co., is being examined by investigators for his role in Galleon trading in the firm's shares during the height of the financial crisis, according to a report Thursday in The Wall Street Journal. Read Wall Street Journal report on Goldman and Galleon.

Gupta hasn't been charged and the report clearly states his own portfolio isn't under review. Still, the widening probe of Galleon offers a rare look at the connections and difficulty regulators have when pursing insider cases.

Wall Street's elite are extremely well-connected and because of that the environment is ripe for insider information to be passed. Gupta had a close working relationship with Galleon founder Raj Rajaratnam. Goldman traded with Galleon, and Rajaratnam was close to many at the bank. Gupta was invited to Galleon parties, underscoring how social circles play a role.

Because of those connections -- both social and professional -- investigators have traditionally had a difficult time finding evidence information was passed. A cocktail party conversation or a phone call can be easily overheard and impossible to trace.

Investigators are ramping up their techniques to pursue cases. The Galleon case relies heavily on wire taps, a method more used in pursing organized crime or terror suspects.

Whether Goldman had a role in the alleged insider trading or was just a bystander is something prosecutors will determine. But the Feds are employing more tools in trying to find out. If suspicions turn to convictions, Wall Street will feel the chill. Phone conversations and other communication could come with a question: who's listening?

-- David Weidner

[Dig]

Goldman charged with fraud over Paulson CDO trade
Shares of investment bank drop 10% after SEC files lawsuit
http://www.marketwatch.com/story/goldman-charged-with-fraud-over-paulson-cdo-trade-2010-04-16

SAN FRANCISCO (MarketWatch) -- The Securities and Exchange Commission on Friday charged Goldman Sachs & Co. and one of its vice presidents for defrauding investors by misstating and omitting key facts about a financial product related to subprime mortgages.

The SEC alleged in a lawsuit that Goldman (GS 161.04, -23.23, -12.61%)  structured and
marketed a collateralized debt obligation that hinged on the performance of subprime residential mortgage-backed securities. However, it failed to disclose the role that a major hedge fund, Paulson & Co., played in the portfolio selection process as well as the fact that the hedge fund had taken a short position against the CDO.

"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," said Robert Khuzami, director of the division of enforcement, in a statement.

Goldman shares dropped 10% to $165.78 in morning trading after the SEC unveiled its suit. See text of complaint.

The SEC's suit is aimed at the heart of one of the most profitable hedge fund trades in history. Paulson, headed by John Paulson, generated billions of dollars in profit in 2007 from bets against CDOs and other firms also made huge gains in similar trades as the housing market imploded, triggering a global financial crisis.

"The SEC continues to investigate the practices of investment banks and others involved in the securitization of complex financial products tied to the U.S. housing market as it was beginning to show signs of distress," Kenneth Lench, chief of the SEC's Structured and New Products Unit, said.

Paulson & Co. paid Goldman to structure a transaction in which the hedge fund giant could take short positions against mortgage securities chosen by Paulson & Co. based on a belief that the securities would experience credit events, the SEC alleged.

Marketing materials for the CDO known as ABACUS 2007-AC1, told investors that the portfolio of residential mortgage-backed securities underlying the CDO was selected by ACA Management LLC, a third party with expertise in analyzing credit risk in these securities.

The SEC alleged that, undisclosed in the marketing materials and unbeknownst to investors, Paulson & Co., which was poised to benefit if the RMBS defaulted, played a significant role in selecting which RMBS should make up the portfolio.

After participating in the portfolio selection, Paulson & Co. effectively shorted the RMBS portfolio it helped select by entering into credit-default swaps with Goldman to buy protection on specific layers of the ABACUS capital structure.

"Given that financial short interest, Paulson & Co. had an economic incentive to select RMBS that it expected to experience credit events in the near future," the SEC said.

Goldman did not disclose Paulson & Co.'s short position or its role in the collateral selection process in the term sheet, flip book, offering memorandum, or other marketing materials provided to investors, the SEC said.

Investors in these securities, including German bank IKB (DE:IKB 0.70, 0.00, -0.57%)  and
Dutch financial-services company ABN Amro, now a unit of the Royal Bank of Scotland (RBS 14.82, +0.53, +3.71%) , lost more than $1 billion when the securities in the CDO
turned toxic, the SEC said.

The deal closed on April 26, 2007, and Paulson & Co. paid Goldman roughly $15 million for structuring and marketing ABACUS.

By Oct. 24, 2007, 83% of the RMBS in the ABACUS portfolio had been downgraded and 17% were on negative watch. By Jan. 29, 2008, 99% of the portfolio had been downgraded. 

Alistair Barr is a reporter for MarketWatch in San Francisco.

[Dig]

U.S. Stocks Drop on Goldman Sachs Fraud Suit
http://www.bloomberg.com/apps/news?pid=20601087&sid=anaM.b0aOXxY&pos=3
By Joanna Ossinger


(Corrects story that moved at 11:01 a.m. to show executive, not investor, was sued in 2nd paragraph.)

April 16 (Bloomberg) -- U.S. stocks retreated, halting a six-day rally, after the Securities and Exchange Commission charged Goldman Sachs Group Inc. with fraud and earnings at Google Inc. trailed some analysts’ estimates.

Goldman Sachs tumbled 10 percent after the SEC sued the company and one of its executives for misstating and omitting key facts about a product tied to subprime mortgages. JPMorgan Chase & Co., Bank of America Corp. and Morgan Stanley sank at least 3.5 percent as all 27 shares in a gauge of diversified banks and brokerages retreated. Google, the owner of the world’s most popular search engine, plunged 5.4 percent after its report underscored the rising cost of pursuing growth in new markets.

“Investors are reacting to headlines of Goldman being charged,” said David Lutz, managing director of equity trading at Stifel Nicolaus & Co. in Baltimore. “Everybody knew there were a lot of issues with subprime securitization. But the fact that they’re targeting Goldman Sachs weighs on the psychology of the financial sector.”

The Standard & Poor’s 500 Index fell 1 percent to 1,199.65 at 11 a.m. in New York, its biggest loss on a closing basis since Feb. 23. The Dow Jones Industrial Average declined 61.36 points, or 0.6 percent, to 11,083.21.

Financial shares in the S&P 500 led the market lower after the SEC announced the case against Goldman Sachs, the most profitable firm in Wall Street history. The S&P 500 Financials Index slid 2.8 percent.

To contact the reporter on this story: Joanna Ossinger in New York at jossinger@bloomberg.net.
Last Updated: April 16, 2010 12:01 EDT

[Dig]

Goldman Sachs property fund down to last $30 mln - FT
http://www.reuters.com/article/idUSN1513125720100416?type=marketsNews
Thu Apr 15, 2010 11:02pm EDT

NEW YORK, April 15 (Reuters) - Goldman Sachs Group Inc's (GS.N) international real estate fund has lost almost all of its $1.8 billion of equity after investments in the United States, Germany and Japan went bad, according to the Financial Times.

The fund, Whitehall Street International, was down to its last $30 million by the end of 2009, according to an annual report sent to investors last month, the Financial Times said.

The report said that Goldman, having invested $436 million, was Whitehall's largest stakeholder.

A Goldman Sachs spokesman declined to comment on the report.

The news comes after revelations earlier this week that Morgan Stanley (MS.N) may lose nearly two-thirds of the money in its $8.8 billion real estate fund due to bad investments. (Editing by Lincoln Feast)

[Dig]

Private Equity
Goldman-Backed Whitehall Said to Lose 98 Percent
April 16, 2010, 5:04 am


Whitehall Street International, the real estate investment fund that counts Goldman Sachs as its largest investor, has seen almost all of its $1.8 billion of equity go up in smoke,  The Financial Times reported.

Apparently, the fund’s leveraged property bets across the globe went south.

The newspaper has this:

By the end of 2009, the fund was down to its last $30m, a paper loss of about 98 cents on the dollar, an annual report sent to investors last month said. The report said that Goldman was Whitehall’s largest investor, with a commitment of $436m. Last year, Goldman took a loss of $1.76bn from all its real estate principal investments.

Goldman isn’t just a shareholder in Whitehall’s portfolio of casinos, hotels and offices; the bank was also adviser and lender to the fund.

[Dig]

Goldman Sachs (GS) Director Probed In Galleon Insider Trading Case
 http://www.benzinga.com/markets/company-news/226930/goldman-sachs-gs-director-probed-in-galleon-insider-trading-case
Ed Liston
Posted on 04/15/10 at 6:14pm by Ed Liston

The Wall Street Journal, citing people close to the situation, has reported that prosecutors are probing whether Rajat Gupta, a director at Goldman Sachs (NYSE: GS), gave inside information about the Wall Street bank to Galleon hedge-fund founder, Raj Rajaratnam. However, in a statement responding to the report, Gupta’s spokeswoman said, “Mr. Gupta is unaware of any examination of any such issue and has done nothing wrong.”

Rajaratnam has pleaded not guilty to criminal insider charges. He faces a related lawsuit by the U.S. Securities and Exchange Commission. As a part of wider insider trading probe, the government, in its March 22 letter made public last week, said that it was probing trades by Rajaratnam and others in shares of several companies. Among the companies being probed, Goldman Sachs is one of them, where trades between June 2008 and October 2008 were being examined. During that time, the bank’s share traded between $74 and $187.

People close to this situation have said to the Wall Street Journal that government was examining whether Gupta shared inside information about Goldman with Rajaratnam during the height of the financial crisis. Whereas, Rajaratnam spokesman has declined to comment, a spokeswoman for Gupta said no criminal charges or other allegations have been filed against him, nor is there any indication that investigators are looking at his own stock trading.

Although the Securities and the Exchange Commission is investigating several stocks, the big banking firm stands out because it executed trades for Galleon for a long time. Also, Messrs Gupta and Rajaratnam were in a separate business partnership several years ago. For the moment, it is still unclear what specific evidence the government may have compiled related to insider trading in the shares of Goldman or other companies listed in the March 22 court filing. The letter has made public that there are 22 companies, in which the U.S. attorney in Manhattan is probing trading by Rajaratnam and other alleged co-conspirators.

The letter from the prosecutors said, “We fully anticipate that the Government's ongoing investigation and review of information will lead to further evidence relating to the charged crimes, including identification of additional uncharged co-conspirators.” The letter also stated that the government’s examination of trading of those stocks as “almost all...clearly disclosed in the wiretap applications, intercepted calls, and consensually recorded calls.”

[Dig]

Just look at that house of cards blow in the wind.

[larsonstdoc]

  Goldman-Sachs has to be the most dishonest company in the US, on the planet, in the universe.  

[jofortruth]

Buffett Bet on Goldman Sachs 'Integrity,' Olson says:
http://www.businessweek.com/news/2010-04-1...s-update1-.html
http://forum.prisonplanet.com/index.php?topic=167014.0

Has Warren revealed his true colors finally? He is one of the boyz, so is covering for his boy friends!  

[larsonstdoc]

Buffett Bet on Goldman Sachs 'Integrity,' Olson says:
http://www.businessweek.com/news/2010-04-1...s-update1-.html
http://forum.prisonplanet.com/index.php?topic=167014.0

Has Warren revealed his true colors finally? He is one of the boyz, so is covering for his boy friends!  

  It's totally sick.  They are raping America.

[Dig]

Buffett Bet on Goldman Sachs 'Integrity,' Olson says:
http://www.businessweek.com/news/2010-04-1...s-update1-.html


Has Warren revealed his true colors finally?  

He revealed his true colors when he "happened" to be in the bunker with Bush in a Nuclear Base on 9/11. He is part of the continuity of government which is so fricking illegal it is not even funny. He gets more power the worse this country does...derrrrrrrrrrrrr derrrrrrrrrrrrrrrrr

as an "investment expert" he should realize what a glaring conflict of interest this is.

The more we fail, the richer he gets.

Oh yeah and if it was not for the theft in the extorted banker's bailouts, he would be on the corner begging for loose change. His companies all failed, he never made a good honest investment in his life, all his money comes from scams with government collusion to rape the common American citizen.

EVERYBODY KNOWS!

Warren Buffett's $95 Billion Ponzi Scheme Exposed!!!
[2x more than Maddoff]
http://forum.prisonplanet.com/ index.php?topic=123059.0

[hyperqube]

so how does John Paulson become Hank Paulson?

[larsonstdoc]

  You watch.  All they will get is a slap on the hand.  Goldman Sachs runs everything-the banks, the fed, the White House, foreign countries, the treasury, the courts, etc.  They must be stopped.  They must be fully exposed

[jofortruth]

He revealed his true colors when he "happened" to be in the bunker with Bush in a Nuclear Base on 9/11. He is part of the continuity of government which is so fricking illegal it is not even funny. He gets more power the worse this country does...derrrrrrrrrrrrr derrrrrrrrrrrrrrrrr

You are right!

http://911review.org/brad.com/team8plus/Of...FB_Buffett.html
http://www.nowpublic.com/world/warren-buff...rporation-911-2

[kevlar442]

  You watch.  All they will get is a slap on the hand.  Goldman Sachs runs everything-the banks, the fed, the White House, foreign countries, the treasury, the courts, etc.  They must be stopped.  They must be fully exposed

Yep.  The Federal Reserve(Goldman Sachs) will now be given more regulatory power over the banks(themselves); and the public will not know the difference.

[Dig]

so how does John Paulson become Hank Paulson?

d'oh!

thanks for the correction, changed the title

[TahoeBlue]

It is interesting that they time released this on a Friday with May  two weeks away ( In May go away ).

They couldn't make the market go much over 12000, so I am sure that there were people in the know shorting the market yesterday before the close.  

Also this may be the beginning of a market retrace downward. I was watching the foriegn exchange this morning before the news broke and the big news was Thailand and if the chinese would (have to) up the value of the Yuan.

Notice also how gs failing has brought down the gold and oil markets..... (minus 2-4 percent)

Also notice SEC VS GS - so now we have Goldman VS Goldman ? Like the auditing of the FED  they are investigating themselves...  they must have a fall guy lined up already.... like "john Paulson" not "hank Paulson" , so the most guilty party "Hank" gets cover

http://en.wikipedia.org/wiki/John_Paulson
John Paulson is not related to former Goldman Sachs CEO and U.S. Treasury Secretary Hank Paulson.
[15][16][17]

Paulson is #45 on the list of the world's wealthiest billionaires[19] and is worth approximately $12 billion as of 2010. In April 2010, NY Times reported Paulson had earned $2.3 billion in 2009 & $2 billion in 2008 from fees received from his Hedge Fund Paulson & Co (He bet against sub prime mortgages long before the term became well known)


http://blog.macroaxis.com/2010/02/16/hedge-fund-king-john-paulson-buys-into-xto-energy-and-wells-fargo-wfc-gld-xto/
Feb 16 2010

Last quarter, Paulson remained big into Gold ($3.4 billion up from $3.1 billion in the 3rd quarter) and Bank of America ($2.5 billion down from $2.7 billion in the 3rd quarter).

His fund's third largest holding was Citigroup, a stake that increased from $1.4 billion to $1.7 billion last quarter.

His biggest new stakes include a $465 million investment in XTO Energy (which is being bought out by Exxon (XOM), a sign he's still into his old merger arbitrage plays) and a $472 million investment in Wells Fargo.

Paulson's other shifts, according to his most recent 13F report, include moving into CIT Group (which Third Avenue just dropped) with $121 million, DirectTV with $170 million, Kraft with $135 million, and Hyatt hotels with $9 million.

[Dig]

Update: SEC says Goldman defrauded investors of $1 billion
http://rawstory.com/rs/2010/0416/charges-goldman-sachs-fraud/
By John Byrne
Friday, April 16th, 2010 -- 11:00 am



The Securities and Exchange Commission has charged investment banking titan Goldman Sachs with civil fraud over a pre-packaged mortgage instrument they say was designed to fail.

Goldman Sachs created the derivative -- called Abacus 2007-AC1 -- in response to a request from a hedge fund manager who predicted that the housing market would collapse and wanted to bet against it. The trader, John Paulson, later earned $3.7 billion for his wager. Goldman's practices cost investors $1 billion, according to the filing.

According to the New York Times, which first revealed details of the Abacus case, the instrument was among 25 Goldman created so that clients could bet against the housing market:

As the Abacus deals plunged in value, Goldman and certain hedge funds made money on their negative bets, while the Goldman clients who bought the $10.9 billion in investments lost billions of dollars.

Goldman let Mr. Paulson select mortgage bonds that he wanted to bet against — the ones he believed were most likely to lose value — and packaged those bonds into Abacus 2007-AC1, according to the S.E.C. complaint. Goldman then sold the Abacus deal to investors like foreign banks, pension funds, insurance companies and other hedge funds.

But the deck was stacked against the Abacus investors, the complaint contends, because the investment was filled with bonds chosen by Mr. Paulson as likely to default. Goldman told investors in Abacus marketing materials reviewed by The Times that the bonds would be chosen by an independent manager.

Apparently, they weren't.

Fabrice Tourre, a vice president at Goldman who helped design and market Abacus, was also named in the SEC suit.

84 percent of Abacus' mortgage bonds would be downgraded within five months of their sale. By the end of 2007, Paulson's credit hedge fund soared 590 percent, and Goldman's clients lost billions.

Goldman reportedly targeted specific mortgage bonds at Paulson's request that Paulson felt were most likely to lose their golden credit ratings, which would trigger a payout for his firm.

Goldman did not immediately comment on the suit. The company's shares fell more than 10 percent on the news.

Shareholder recently sued firm for huge bonus payouts

In January, a lawsuit filed against the investment bank by a shareholder alleged that the company spent more money on corporate bonuses than it earned in 2008.

Shareholder Ken Brown's lawsuit is one of two suits filed against the company over its controversial decision to hand out billions of dollars in bonuses even after it was accused of playing a central role in the financial collapse of 2008 and receiving $10 billion in direct aid from the US government.

In his lawsuit (PDF), Brown asserted that Goldman Sachs gave out $4.82 billion in bonuses in 2008, despite earnings of only $2.32 billion that year. The lawsuit alleges that the company spent 259 percent of its income in the first quarter of 2009 on compensation.

Goldman Sachs handed out $16.7 billion in compensation in the first nine months of 2009, according to Bloomberg News, and that figure may reach $22 billion for the entire year. Brown's suit says the company typically sets aside 44 percent of its net revenue for employees.

“Payment of this exorbitant amount of compensation, which has little to do with Goldman Sachs’s performance, and was financed in large part with government bailout and taxpayer money, is a waste of the company’s assets and a breach of duty and loyalty," Brown asserts in the suit.

Goldman CEO Lloyd Blankfein earned $9 million in a non-cash bonus for 2009. In prior years, he'd earned more than $20 million.

[TahoeBlue]

Notice CIVIL not CRIMINAL...

http://www.businessinsider.com/henry-blodget-fraud-fallout-fabrice-tourre-is-toast-goldman-will-be-fine-2010-4
FRAUD FALLOUT: Fabrice Tourre Is Toast, Goldman Will Be Fine


We haven't had time to review the SEC's fraud allegations against Goldman Sachs (GS) and 31-year-old senior vice president, Fabrice Tourre, in detail yet, but we've scanned them.

Based on the scan, we have not seen any screaming smoking guns.  There is certainly evidence that Goldman and Tourre said one thing internally and another externally.  It also appears that the information that was omitted in the external marketing materials would likely have been of interest to investors.

That's not proof of fraud, but, as represented by the SEC, it looks bad.  Goldman will want to make it go away (read: out of the headlines) as quickly as it can.

Importantly, this is NOT a criminal indictment.  It is a civil lawsuit.  The SEC and Justice Department usually work together, so the absence of a criminal charge suggests that the Justice Department did not feel criminal charges were warranted.

So here's what's likely to happen to both parties:

Goldman Sachs will have to write a big check, and then it will be fine:  Goldman will likely say the charges have no merit and then, in a month or two, settle with the SEC for a few hundred million dollars (chicken feed).  Goldman will then defend itself against the civil lawsuits that arise from this and probably settle those as well.  There may also be follow-on lawsuits for other CDOs and products Goldman created.  Those, too, will likely be settled or dismissed.  Bottom line: This will cost Goldman some money, but not enough to matter to investors.

Fabrice Tourre will be placed on administrative leave or fired (a.k.a., thrown under the bus).  He will then spend the next couple of years testifying in this and other follow-on civil lawsuits.  The SEC will probably demand a cash settlement from him, too, and boot him out of the industry.    Based on our scan of the allegations, Tourre was involved in every aspect of the structuring and marketing of the CDO in question.  The complaint includes snippets of communications in which Tourre describes the CDO one way internally and another way externally.  Again, this is not proof of fraud, but, at least as represented by the SEC, it looks bad.  Tourre will likely want to fight the charges, especially if he thinks they're b.s., but it will be too risky and expensive for him to do so, so he'll likely settle.  Having made such public allegations, the SEC will make sure that any settlement produces an appropriately tough-looking headline (thus the fine and industry dismissal).

http://money.cnn.com/2010/04/16/news/companies/goldman_fabrice_tourre_sec/index.htm?postversion=2010041614
Who is the 'fabulous' Fabrice Tourre?
...
But the SEC's most damning allegations refer to one of Tourre's e-mails, written in French and English, to an unnamed friend, where he confidently presented himself as the lone, "fabulous" survivor amid the apocalyptic fallout of his finance firm.

"More and more leverage in the system, The whole building is about to collapse anytime now ... Only potential survivor, the fabulous Fab[rice Tourre] ... standing in the middle of all these complex, highly leveraged, exotic trades he created without necessarily understanding all of the implications of those moustruosities[sic]!!!" wrote Tourre on Jan. 23, 2007, according to SEC documents.

At the time, Tourre was working at a trading desk for structured products in New York City, according to the SEC. The 31-year-old is currently in London as executive director of Goldman Sachs International.

He did not immediately respond to an e-mail sent via his LinkedIn account, where he identifies himself as a 2000 graduate of Ecole Centrale Paris with a bachelor's degree in mathematics, followed by a 2001 master's degree in operations research from Stanford University. According to the bio, he has worked at Goldman since 2001.

Goldman did not immediately return a call seeking comment and information concerning Tourre's lawyer

[Dig]

^ There are over 1,000 Fabrice Tourre's at Goldman Sachs. It is a systemic problem and while their plan is to make this "go away", our plan is to continue exposing the truth about this criminal organization. This group of thugs have been at the forefront of the now completely exposed private federal reserve's rape of America.

[Freebird100]

Another dog and pony show!!

[Dig]

Another dog and pony show!!

only if we let it.

apathy is our greatest enemy, not Goldman Sachs

[Freebird100]

http://www.youtube.com/user/TheBobChapmanChannel#p/u/3/kVd3uph3nhQ

From AJ`s show April 16th.

[Dig]

Did you catch the CT Atty Gen Blumenthal saying how the rules were changed before this latest scam that neutered the States and gave the regulation power to the SEC and other regulatory agencies which of course were all run by the PERPETRATORS with their guys in power?

This is but another red flag that they did it intentionally!

 

[Dig]

Goldman fraud charges trigger fears of wider market crackdown
http://rawstory.com/rs/2010/0417/goldman-fraud-charges-trigger-fears-wider-market-crackdown/
By Agence France-Presse
Saturday, April 17th, 2010 -- 10:32 am


Wall Street giant Goldman Sachs faced charges of financial fraud on Saturday as US financial firms eyed the prospect of a wider crackdown on those that bet on the collapse of the housing market.

A civil suit filed by the Securities and Exchange Commission Friday accused Goldman of "defrauding investors by misstating and omitting key facts" about a financial product based on subprime mortgage-backed securities.

The securities were a key contributor to the financial crisis that peaked in 2008 because many contained risky mortgages.

The charges are believed to be the first brought against a Wall Street firm for speculating on the collapse of the housing market, which is still struggling to emerge from the worst financial crisis in decades.

Underlining persistent concerns about the unfettered trade, US President Barack Obama said Friday he would veto a Wall Street reform bill that lacked tough rules for complex financial instruments.

"I will veto legislation that does not bring the derivatives market under control and some sort of regulatory framework assures that we don't have the same sort of crisis we have seen in the past," Obama said.

The SEC said Goldman failed to tell investors that a major hedge fund had helped put together the controversial financial product known as collateralized debt obligation (CDO) and was at the same time betting against it.

Paulson & Co, one of the world's largest hedge funds, paid Goldman Sachs to structure a transaction in which it could take speculative positions against mortgage securities chosen by the fund, the commission said in a statement.

The deal, which took place during a massive mortgage meltdown in 2007 and as the country was about to fall into a brutal recession, was said to have cost investors around one billion dollars.

Goldman claimed that it lost 90 million dollars from its own investment in the security.

"We are disappointed that the SEC would bring this action related to a single transaction in the face of an extensive record which establishes that the accusations are unfounded in law and fact," the company said.
Goldman said it would "vigorously contest them and defend the firm and its reputation."

Paulson & Co founder John Paulson said he had no role in choosing the mortgages. The 54-year-old fund manager was not named as a defendant in the suit, and Robert Khuzami, director of enforcement at the SEC explained that, unlike Goldman, Paulson & Co had not made misrepresentations to investors buying the security.

The lawsuit also named Fabrice Tourre, then a vice-president at Goldman. He was said to be the creator and salesman of the product, which caused investors to lose about one billion dollars.

"The product was new and complex but the deception and conflicts are old and simple," said Khuzami in a statement.

Analysts said a long courtroom battle could now be expected.

The authorities have not ruled out the possibility of others involved in the alleged fraud or other similar types of fraud.

"The SEC continues to investigate the practices of investment banks and others involved in the securitization of complex financial products tied to the US housing market as it was beginning to show signs of distress," said Kenneth Lench, head of the SEC's structured and new products unit.

It is not known whether the SEC might refer the case to the Department of Justice for criminal prosecution.

"The fact that the only individual charged here, after what was presumably a very thorough investigation, was a vice president rather than a managing director or higher, is relatively reassuring news for Goldman," said Bank of America-Merrill Lynch research analyst Guy Moszkowski.

He said it seemed most likely that the potential for more serious charges rose dramatically the higher up the management chain the charges went.

Among investors of Goldman's controversial product were German commercial bank IKB.

Goldman shares dived 12.79 percent Friday to 160.70 dollars, after falling as much as 15 percent when news of the fraud charges first hit the market.

The Dow Jones Industrial Average tumbled 125.91 points or 1.13 percent to end the week at 11,018.66 points, snapping a six-session winning streak that had driven the blue-chip index to a fresh 18-month high.

Oil prices also fell sharply, with New York's main contract, light sweet crude for delivery in May, slipping 2.27 dollars to 83.24 dollars a barrel.

On Saturday, The New York Times suggested in an editorial the charges may be just the beginning of a broader government campaign against Wall Street.

"Goldman is not the only bank to have sold mortgage-backed securities and then bet against them," the newspaper said. "We suspect that after Friday, others on Wall Street may have a harder time sleeping."

[Dig]

Report: Germany may consider Goldman action
http://news.yahoo.com/s/ap/20100417/ap_on_bi_ge/eu_germany_us_goldman_sachs/
1 hr 38 mins ago


BERLIN – The German government may consider taking legal action in a case in which Goldman Sachs & Co. is accused of defrauding investors, a newspaper reported Saturday.

The U.S. government alleges Goldman Sachs sold mortgage investments without telling buyers they were crafted with input from a client who was betting on them failing.

Buyers included German bank IKB Deutsche Industriebank AG — an early victim of the financial crisis that was rescued by the state-owned KfW development bank among others.

The Welt am Sonntag newspaper quoted Chancellor Angela Merkel's spokesman, UIrich Wilhelm, as saying that German regulator BaFin will ask the U.S. Securities and Exchange Commission for information.

"After a careful evaluation of the documents, we will examine legal steps," he said, according to the report.

There was no immediate confirmation from the government.

IKB spokeswoman Annette Littmann said the bank is aware of the charges filed by the SEC, but declined to comment further.

[jofortruth]

Did you catch the CT Atty Gen Blumenthal saying how the rules were changed before this latest scam that neutered the States and gave the regulation power to the SEC and other regulatory agencies? These, of course, were all run by the PERPETRATORS with their guys in power!
http://www.msnbc.msn.com/id/31510813/#36604057

This is but another red flag that they did it intentionally!

(reposted this - forgot the link)

[jofortruth]

The Legal Doc stating charges:
http://www.theglobeandmail.com/globe-investor/banks-will-feel-goldman-fallout/article1536686/

[jofortruth]

Explanation of the Charges:
http://www.theglobeandmail.com/globe-investor/boyd-erman-explains-the-secs-charges-against-goldman-sachs/article1536972/

A Graphic:
http://www.theglobeandmail.com/report-on-business/graphic-how-the-deal-worked/article1537447/

[TahoeBlue]

Found - Alan Greenspan John Paulson connection in plain site!

Goldman Sachs’s Blankfein Says Firm Didn’t Bet Against Clients

See  Alan GreenSpan 's relationship to John Paulson and Deutsche Bank AG and BIS:

Also notice the Timothy F. Geithner is a TRUSTEE of the RAND Corporation!


http://investing.businessweek.com/businessweek/research/stocks/people/person.asp?personId=23970022&ticker=DBK:GR&previousCapId=410467&previousTitle=Deutsche%20Bank%20AG
EXECUTIVE PROFILE*
Alan Greenspan Ph.D.     Senior Advisor, Deutsche Bank AG 11


http://investing.businessweek.com/businessweek/research/stocks/people/relationship.asp?personId=23970022

Deutsche Bank AG
BOARD MEMBERS AFFILIATED WITH Alan Greenspan Ph.D.*
Alan Greenspan Ph.D.     Senior Advisor 11 Age Total Annual Compensation
-- --
John Alfred Paulson Paulson & Co. Inc. Board Affiliations Paulson & Co. Inc.

http://investing.businessweek.com/businessweek/research/stocks/private/people.asp?privcapId=4532548

KEY EXECUTIVES FOR Paulson & Co. Inc.*
Name Board Relationships Title Age
John Alfred Paulson   1 Relationships President, Portfolio Manager, and Director --
Christopher Alan Bodak  No Relationships Chief Financial Officer and Vice President --
Rufus Putnam Coes   28 Relationships Chief Operating Officer --
Jonas Frantz  No Relationships Senior Vice President and Co-Head of Investor Relations --
Andrew Hoine  No Relationships Senior Vice President and Director of Research --
Timothy Maher  No Relationships Senior Vice President and Co-Head of Investor Relations --
Sihan Shu  No Relationships Managing Director --
Michael Waldorf  No Relationships Senior Vice President --


Paulson & Co. Inc. BOARD OF DIRECTORS*
Name Board Relationships Primary Company Age
John Alfred Paulson   1 Relationships Paulson & Co. Inc. --
Alan Greenspan Ph.D.  1 Relationships Deutsche Bank AG

It is interesting that they time released this on a Friday with May  two weeks away ( In May go away ).

They couldn't make the market go much over 12000, so I am sure that there were people in the know shorting the market yesterday before the close.  

Also this may be the beginning of a market retrace downward. I was watching the foriegn exchange this morning before the news broke and the big news was Thailand and if the chinese would (have to) up the value of the Yuan.

Notice also how gs failing has brought down the gold and oil markets..... (minus 2-4 percent)

Also notice SEC VS GS - so now we have Goldman VS Goldman ? Like the auditing of the FED  they are investigating themselves...  they must have a fall guy lined up already.... like "john Paulson" not "hank Paulson" , so the most guilty party "Hank" gets cover

http://en.wikipedia.org/wiki/John_Paulson
John Paulson is not related to former Goldman Sachs CEO and U.S. Treasury Secretary Hank Paulson.
[15][16][17]

Paulson is #45 on the list of the world's wealthiest billionaires[19] and is worth approximately $12 billion as of 2010. In April 2010, NY Times reported Paulson had earned $2.3 billion in 2009 & $2 billion in 2008 from fees received from his Hedge Fund Paulson & Co (He bet against sub prime mortgages long before the term became well known)


http://blog.macroaxis.com/2010/02/16/hedge-fund-king-john-paulson-buys-into-xto-energy-and-wells-fargo-wfc-gld-xto/
Feb 16 2010

Last quarter, Paulson remained big into Gold ($3.4 billion up from $3.1 billion in the 3rd quarter) and Bank of America ($2.5 billion down from $2.7 billion in the 3rd quarter).

His fund's third largest holding was Citigroup, a stake that increased from $1.4 billion to $1.7 billion last quarter.

His biggest new stakes include a $465 million investment in XTO Energy (which is being bought out by Exxon (XOM), a sign he's still into his old merger arbitrage plays) and a $472 million investment in Wells Fargo.

Paulson's other shifts, according to his most recent 13F report, include moving into CIT Group (which Third Avenue just dropped) with $121 million, DirectTV with $170 million, Kraft with $135 million, and Hyatt hotels with $9 million.