SEC sues Goldman Sachs for securities fraud (and other financial schadenfreude)

http://www.nytimes.com/2010/04/17/business/17goldman.html

The upshot: alleges a Goldman group deliberately created and sold a shitty mortgage-backed investment so that a hedge fund friend could profit by betting against it.

My guess is we'll hear more stories like this.

There have been some other similar stories recently. Search Google News for "Magnetar" for instance. Though this is the first case I've heard of where someone has actually been able to connect all the dots to bring a case.

I agree with you that this probably going to open the floodgates though, for Magnetar and others who tried other similarly conflicted trades without proper disclosure.

Khuzami: SEC Is Investigating "Similar" CDO Deals
http://blogs.wsj.com/deals/2010/04/16/khuzami-sec-is-investigating-similar-cdo-deals/?mod=yahoo_hs

GS == Goddamn Scumsuckers?

This quote from the complaint neatly summarizes the whole economic crisis

“It is true that the market is not pricing the subprime RMBS wipeout scenario. In my opinion this situation is due to the fact that rating agencies, CDO managers and underwriters have all the incentives to keep the game going, while ‘real money’ investors have neither the analytical tools nor the institutional framework to take action before the losses that one could anticipate based on the ‘news’ available everywhere are actually realized.”

what took so motherfucking long?

Taibbi highlights some of their ballsy internal documents:

http://www.rollingstone.com/politics/blogs/taibblog/testimony-goldman-style-a-tour-through-the-levin-report-20110513

But as discussed elsewhere, Taibbi notes Justice has yet to indict them for lying to Congress

salon.com:

Matt Taibbi argues forcefully in Rolling Stone this month that, following indicting Senate hearings, executives at Goldman Sachs deserve to go on criminal trial for their part in the financial crisis.

On Sunday's "Your Money" on CNN, Taibbi pushes his point against Megan McArdle of the Atlantic Monthly. McArdle, described on CrooksAndLiars.com as a "Wall Street apologist" essentially suggests that we shouldn't prosecute the bankers, because convictions are too difficult to get and that they probably meant well really. Taibbi is, unsurprisingly, unconvinced:

new york attny general currently building a case against the big 3, check front page of the NYT

Is F@br1ce T0urre's trial date set?

I had dinner with him last year, without knowing who he was. Huge fan of Big Bang Theory.

Greenwald vacation sub Yves Smith on why we "can't" bust anybody from the Great Swindle:

http://www.salon.com/news/opinion/glenn_greenwald/2011/08/08/sec_fraud/index.html

http://www.washingtonpost.com/business/justice-dept-says-it-wont-prosecute-goldman-sachs-or-its-employees-in-financial-fraud-probe/2012/08/09/1d02c486-e27f-11e1-89f7-76e23a982d06_story.html?hpid=z4

Another good day for Goldman-Sachs

with liberty and justice for all

Pleased they didn't go after Tourre as an individual but if there wasn't some kind of corporate criminality at work i'd be amazed.

http://www.rollingstone.com/politics/blogs/taibblog/ag-eric-holder-has-no-balls-20120815

Taibbi may or may not be right that the Hudson deal was fraud, but he sounds so fucking DUMB when he writes stuff like this:

But here’s the thing: most of the crimes Wall Street people commit involve highly specific, highly individualized transactions that won’t fit Eric Holder’s bag of cookie-cutter statutory definitions. That is not the same thing as saying they’re not crimes. They are: the crimes of the crisis period were and are very basic crimes like fraud, theft, perjury, and tax evasion, only they’re dressed up in millions of pages of camouflaging verbiage.

Oh I see, they're not those hyper-technical "statutory" crimes, they're "basic" crimes.

I probably need to brush up on my "basic" criminal law a little

Corzine is also apparently not gonna be prosecuted.

Taibbi:

A good prosecutor should look down the barrel of a bunch of millionaire lawyers at Davis Polk or White and Case and feel turned on by the challenge of combat. Making a deal with any devil should burn him at the core, keep him awake at night.

But that's exactly who Eric Holder and Lanny Breuer haven't been, exactly who Bob Khuzami at the SEC hasn't been. Instead of being fighters, they've been dealmakers and plea-bargainers. They've dealt out every major financial scandal, from Abacus to the Muni-bid-rigging cases (they prosecuted a few low-level guys at GE but let the big players at the big banks skate) to the Citigroup fraud settlement that was so bad a judge threw it back at the govenment's face. In that latter case, amazingly, the govenment is now fighting not for its constituents, but for its right to give out crappy deals to repeat-offender banks without judicial review.

http://www.rollingstone.com/politics/blogs/taibblog/matt-taibbi-eliot-spitzer-discuss-eric-holders-failure-20120822

I'm always a little torn between applauding Taibbi for wanting things to work the way they ought to work and mocking him for his childish, wholly ignorant ideas about the way things are actually capable of working.

FWIW, I don't think Holder is afraid of facing big bad Davis Polk lawyers, nor is the characterization of the Citi settlement situation accurate.

I mean, I think at very least, Taibbi's goals would require a MUCH larger and better-funded SEC and DOJ (at least the financial fraud division) and some drastic rewriting of existing law. But Taibbi seems to think the problem is that Holder and Khuzami need to be badass superheroes and go all out against the bad guys or something.

http://www.americanlawyer.com/PubArticleALD.jsp?id=1202612040435&Meet_Robert_Khuzami_Kirklands_New_5_Million_Man

lol

Khuzami says that after stepping down from the SEC in January, there was a “significant amount of interest early on” for his services

http://www.theguardian.com/business/2013/aug/01/fabulous-fab-tourre-guilty-fraud

Tourre has been convicted. Always a convenient fall guy.

Fabrice Tourre was described by the face of "Wall Street greed" by Securities and Exchange Commission lawyers

loltypo

http://tv.msnbc.com/2013/08/01/ironically-ex-goldman-sachs-banker-tourre-got-the-bad-end-of-a-deal/

“he is the lowest-ranking face on the totem pole of Goldman’s former mortgage team.” (Heidi Moore)
■“In the list of bad guys from the run-up to the financial crisis, I have a hard time putting Tourre in the top 100 villains.” (Neil Irwin)
■And then there’s Goldman Sachs. Toure may have delivered the pizza but Goldman Sachs helped bake it. For their crime, Goldman paid a hefty $550 million fine. However, it admitted no wrongdoing. (SEC)
■That’s one of the largest civil penalties ever for a Wall Street firm. Of course, in the most recent quarter, profits doubled to $1.9 billion. So, they should be fine. (Goldman Sachs)
■“The two banks that bought the Abacus deal both received multiple bailouts from the taxpayers of Germany and Britain.” (The Washington Post)

Fabrice Tourre was described by the face of "Wall Street greed" by Securities and Exchange Commission lawyers
loltypo

― sktsh, Friday, August 2, 2013 8:27 AM Bookmark Flag Post Permalink

what's the typo?

"by the face" instead of "as the face"

oh durr

http://www.vanityfair.com/business/2013/09/michael-lewis-goldman-sachs-programmer

The jury consisted mainly of high-school graduates and lacked anyone with experience programming computers. “They would bring my computer into the courtroom,” recalls Serge incredulously. “They would pull out the hard drive and show it to the jury. As evidence!” Save for Misha Malyshev, Serge’s brief employer, the people who took the stand had no credible knowledge of high-frequency trading: how the money is made, what sort of computer code is valuable, etc. Malyshev, who’d been subpoenaed as a witness for the prosecution, testified that Goldman’s code was of no use whatsoever in the system he’d hired Serge to build—he insisted that it had never been his plan to import code from anywhere because he wanted to build Teza’s system from scratch. He wanted something flexible and fast, that he could continuously upgrade. Even if offered Goldman’s entire high-frequency-trading platform he would not have been interested—but when he looked over he saw that half the jury appeared to be sleeping.

LOL @ USA

http://thinkprogress.org/economy/2016/04/11/3768216/goldman-sachs-schneiderman-fine-print/

Ugh

it's kind of amazing how little most folks give a fuck about this. eight short years ago $14 trillion vanished from the economy, millions of families lost their homes, millions of people lost their jobs, and millions more have had their career trajectories stunted. but hey whatevs

Hillary's plutobots are doing their job

my folks lost close to 40% of their retirement savings and had to put off retiring for years. this happened to millions of people. rather than retiring and being grandparents they had to work because of the financial sector's inability to do its job properly. people lost YEARS OF THEIR LIVES to this.

but i think ILX is more centrist and you would imagine i was told here last month by someone who works in the banking that actually the bailout was a positive, because it made a net profit.

Ah, yes. I can recall how in 2009 the nation was told that it would be impossible to fire the crooks specialists who created all those stinking rotten CDOs troubled assets, because they were the only people who truly understood how they were rigged to explode worked and could assist the government in burying the evidence unwinding the positions in an orderly fashion. That's why they must continue to receive their obscene bonuses accustomed compensation, lest they choose to scuttle off to Costa Rica, like the cockroaches they are take their talents elsewhere.

I think it's important not to conflate the Goldman Sachs and Blackrocks of the world with more consumer-focused institutions. For instance, Goldman and Wells Fargo are not remotely similar companies, except in terms of size. Wells has a balance sheet almost entirely based on consumer and commercial lending as opposed to trading/securities/derivatives etc. (which in some ways is an artificial distinction because of the secondary market in packaging and trading lending instruments, but still a meaningful one in my opinion) and is one of the largest mortgage lenders in the country (including, throughout the recession, FHA). This sort of gets back to the Glass-Steagall divide. I mean, call me a banking apologist, but there is some nuance that gets lost in the anti-banking hysteria.

Also Citi/BOA/Wells have huge risk management, loss mitigation, and compliance apparatuses which are far more sophisticated and resilient than anything a smaller lender can manage. Try getting a loan modification from Rocket Mortgage (or whatever hole-in-the-wall servicer they assign the loan to).

"hysteria" is right-wing fever dreams about benghazi, not horror about what happened to the world financial system eight or so years ago imho

idk, there's this guy bernie sanders... perhaps you've heard of him. he says he's going to break up the banks. when pressed to actually explain how he was going to do this, some guys he hired said he would force the banks to decide how to break themselves up. he's a great man.

i'm not even exaggerating. read his dumbass plan.

Shitmouth

it's counterproductive or at least non-productive to focus on that distinction. the financial industry itself doesn't place much value in that distinction, which is why the whole mess got started. i could care less about Sanders having everything lined up when he is the only person saying HEY MAYBE LETS NOT PUSH THIS CAR THAT WE ARE IN OVER THE CLIFF

i mean, "bank" or "financial institution", whatever man, they both handle money, and do so poorly.

handle the money, adam, i trust you now that you have explained there is no distinction and we are headed over a cliff and here we are in a car and what are we to do it is all so impossible

here are a trillion dollars in leveraged assets for you to unwind. i'm glad we no longer need banks. good luck.

Signed,
a low-level risk manager

is the free market really that scary of a place to you

yes.

oh wait are you the one saying how the bailout made a profit in the other thread?

lol ok nvmd enjoy your fantasy realm peace out

it did. yes, that carefully managed government program made a profit, it's true.

The "profit" TARP earned was less than inflation.

0.5 percent is still a good rate on not having your banking system collapse

plenty of room to criticize handling of the crisis but TARP is an unqualified great moment in history imo

lmao

TARP is an unqualified great moment in history imo

I take issue with that "unqualified". I'd add plenty of qualifications.

TARP should have been accompanied by a massive audit of every bank, placing weak banks into receivership, and the replacement of the officers and boards of directors of all the banks that participated in the unsound banking practices that created the crisis. The bond rating agencies should have been taken over by the government and the officers prosecuted for fraud. Goldman Sachs should not exist any more.

I don't care if it meant the Department of Justice had to quadruple in size to do the job properly or if the federal courts needed twice as many judges and courtrooms running 20 hours a day. Thousands of people knew this was pure fraud and they gladly pocketed hundreds of millions of easy profits from it. afaics, no one was ever punished for their role in that. That stinks to high heaven.

everyone rightly hates the details of it and everything they did or didn't do since, but it was the big move that arrested the downward spiral to hell. our parallel selves in the alternative universe where TARP didn't happen are shaking their heads at our ingratitude

but i think ILX is more centrist

lol why, cos they regularly disagree w/ you on the merits of the bailout? the flipside is, we could all be living in cardboard houses right now. but really pretty ones if you use glitter, crayons and googly eyes.

aimless otm

in an alternate universe the government instituted a financial transaction tax and cancelled all debt everyone owed to the banks instead of bailing out and continuing to prop up the banks up with low interest borrowing, and our parallel selves are laughing their asses off at what suckers we are for apologizing for the biggest crooks in human history. bernie sanders is a centrist in that smarter more ballsy dimension

lol why, cos they regularly disagree w/ you on the merits of the bailout? the flipside is, we could all be living in cardboard houses right now. but really pretty ones if you use glitter, crayons and googly eyes.

― Neanderthal, Saturday, April 16, 2016 1:36 AM (13 hours ago) Bookmark Flag Post Permalink

yes in your very narrow and specified depiction of a non-bailout apocalypse, we would be doing that. congratulations on contributing to the national fan fiction archives. your candidate Hillary Clinton will do a lot of good things in addition to continuing an unnecessary and dangerous financial industry-government co-dependency.

i am not saying burn all banks down. this is another part of your convenient fiction. this is the fiction that helped pass the bailout in the first place.

obviously if we are rewriting history there can be more than one point of view. Bill Clinton doesn't have more Speech Points (SP) than me. he doesn't define what the anti-bank sentiment wants.

this is common sense, look at who he's married to.

i mean what if the bailout hadn't happened and everyone foreclosed on their house and we spent trillions of dollars buying every family in america houses? would that have been so bad?

things would have gotten so bad that * gasp * we wouldn't have had to bailout more than just the financial industry. then we would just have a mass social bailout. there would be far more transparency in how that money was spent.

I prefer Hillary fanfic to the Bernie slashfic you write

(And I voted for the dude!)

fuck the rich

http://www.newyorker.com/business/currency/why-the-s-e-c-didnt-hit-goldman-sachs-harder

I worked on the enron criminal trial and I've seen what happens when the government decides to go after you. spoiler alert: its rough as fuck and I wouldnt wish it on my worst enemy.

Its incredible to me that nobody got charged in this shit.. Enron was unique in that it was only one company and easy to target the 'bad guys' to make examples of.. The fact that all these pigs were at the trough in the banking collapse makes it harder to do that.