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InvisibleArmFromTheAbyss
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SEC sues Goldman Sachs for fraud
    #12405530 - 04/16/10 06:36 PM (13 years, 11 months ago)

Breaking news:

Quote:

Goldman Sachs created and sold CDOs tied to subprime mortgages in early 2007, as the U.S. housing market faltered, without disclosing that hedge fund Paulson & Co. helped pick the underlying securities and bet against the vehicles, the Securities and Exchange Commission said today.



http://www.bloomberg.com/apps/news?pid=20601087&sid=aMVnYAF6bYCw&pos=1

I know y'all are experts on synthetic CDO's but basically John Paulson's hedge fund hand selected a bunch of toxic mortgages, had Goldman package them into a CDO and bought a CDS on it. Meanwhile Goldman Sachs sold this CDO to other investors but telling them an independent third party had selected the mortgages it contained. Truth is Paulson jam-packed this CDO full of shit. In the end Paulson made $1B while the others lost $1B.:moneyeyes:

Obviously nobody would buy a security if they were told it was designed to explode in their faces. But Goldman Sachs failed to disclose this because they make their fees by apparently defrauding clients.  :bomb:

These people are scumbags and they've earned their reputation. We can only assume that fraud is endemic on Wall St.


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InvisibleShins
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Re: SEC sues Goldman Sachs for fraud [Re: ArmFromTheAbyss]
    #12407357 - 04/17/10 01:47 AM (13 years, 11 months ago)

This stinks of show trial to me, it's only a civil suit.  Goldman sachs are financial terrorists.  The treasury secretary is ex goldman ex fed reserve, fraud to the max.

This suit is only one facet of the fraud,  another example is The high frequency trading they use to rig the markets because they have servers with uber stock merket hacks next door to the stock exchange which can slip in buy and sell orders during the delay from other ones.  It's outright theft I don't know why people don't peruse these terrorists like they do al quida. people are starving and suffering as these guys rob the people blind. Obviously the government wont do it,  it is filled with goldman sachs people.

Land of the fraud, home of the depraved.

:scream:


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Edited by Shins (04/17/10 01:47 AM)

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InvisibleShins
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Re: SEC sues Goldman Sachs for fraud [Re: Shins]
    #12407380 - 04/17/10 01:54 AM (13 years, 11 months ago)

General Electric is also under investigation after apparently lying about the outlook of it's stocks when they knew they were in trouble.

http://www.businessweek.com/news/2010-04-16/ge-faces-sec-review-after-paulson-writes-about-immelt-s-worries.html?utm_source=Frankguillen&utm_medium=laconica&utm_campaign=FrankGuillen+Buzz

Quote:

April 16 (Bloomberg) -- The U.S. Securities and Exchange Commission is reviewing General Electric Co.’s 2008 disclosures after ex-Treasury Secretary Henry Paulson said the firm told him at the peak of the financial crisis it struggled to sell debt.

In his book “On the Brink: Inside the Race to Stop the Collapse of the Global Financial System,” Paulson says he discussed GE’s problems selling commercial paper with Chief Executive Officer Jeffrey Immelt during a phone call on Sept. 8, 2008, and in person on Sept. 15, the day Lehman Brothers Holdings Inc. filed for bankruptcy. GE said in a Sept. 14 memo to investors that its corporate debt programs “remain robust.”




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Invisiblememes
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Re: SEC sues Goldman Sachs for fraud [Re: Shins]
    #12407824 - 04/17/10 07:13 AM (13 years, 11 months ago)

Quote:

Shins said:
is only one facet of the fraud,  another example isThe high frequency trading they use to rig the markets because they have servers with uber stock merket hacks next door to the stock exchange which can slip in buy and sell orders during the delay from other ones



I want to know how that is fraud.

Quote:

Fraud is generally defined in the law as an intentional misrepresentation of material existing fact made by one person to another with knowledge of its falsity and for the purpose of inducing the other person to act, and upon which the other person relies with resulting injury or damage.



http://definitions.uslegal.com/f/fraud/


Make the connection.  Go.





In regards to the OP:  Yeah thats shitty.

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InvisibleShins
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Re: SEC sues Goldman Sachs for fraud [Re: ArmFromTheAbyss]
    #12408035 - 04/17/10 09:10 AM (13 years, 11 months ago)

Quote:

The slower traders faced a quandary: If they sought to buy a large number of shares at once, they would tip their hand and risk driving up Broadcom’s price. So, as is often the case on Wall Street, they divided their orders into dozens of small batches, hoping to cover their tracks. One second after the market opened, shares of Broadcom started changing hands at $26.20.

The slower traders began issuing buy orders. But rather than being shown to all potential sellers at the same time, some of those orders were most likely routed to a collection of high-frequency traders for just 30 milliseconds — 0.03 seconds — in what are known as flash orders. While markets are supposed to ensure transparency by showing orders to everyone simultaneously, a loophole in regulations allows marketplaces like Nasdaq to show traders some orders ahead of everyone else in exchange for a fee.

In less than half a second, high-frequency traders gained a valuable insight: the hunger for Broadcom was growing. Their computers began buying up Broadcom shares and then reselling them to the slower investors at higher prices. The overall price of Broadcom began to rise.

Soon, thousands of orders began flooding the markets as high-frequency software went into high gear. Automatic programs began issuing and canceling tiny orders within milliseconds to determine how much the slower traders were willing to pay. The high-frequency computers quickly determined that some investors’ upper limit was $26.40. The price shot to $26.39, and high-frequency programs began offering to sell hundreds of thousands of shares.

The result is that the slower-moving investors paid $1.4 million for about 56,000 shares, or $7,800 more than if they had been able to move as quickly as the high-frequency traders.






I would say that this  applies as "intentional misrepresentation of material existing fact made by one person to another with knowledge of its falsity and for the purpose of inducing the other person to act, and upon which the other person relies with resulting injury or damage."

They falsify the stock prices (intentional misrepresentation of material existing fact) so that slower traders pay more which they profit from (knowledge of its falsity and for the purpose of inducing the other person to act, and upon which the other person relies with resulting injury or damage.)


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Offlinezappaisgod
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Re: SEC sues Goldman Sachs for fraud [Re: Shins]
    #12408068 - 04/17/10 09:20 AM (13 years, 11 months ago)

:rofl2:That's quite the pretzel.

Maybe to level the playing field they should all go back to using ticker tapes and forbid computers entirely.


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Invisiblememes
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Re: SEC sues Goldman Sachs for fraud [Re: zappaisgod]
    #12408650 - 04/17/10 12:06 PM (13 years, 11 months ago)

Seriously :suicide:

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OfflineMr.Al
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Re: SEC sues Goldman Sachs for fraud [Re: zappaisgod]
    #12408875 - 04/17/10 12:52 PM (13 years, 11 months ago)

Quote:

zappaisgod said:
:rofl2:That's quite the pretzel.

Maybe to level the playing field they should all go back to using ticker tapes and forbid computers entirely.





Stockpiling precious metal doesn't seem insane compared to wallstreet shenanigans.

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Offlinezappaisgod
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Re: SEC sues Goldman Sachs for fraud [Re: Mr.Al]
    #12408924 - 04/17/10 01:00 PM (13 years, 11 months ago)

I agree.  That's why I don't deal with them.  Where's your vault?  I'd like to visit it one day.

The laugher about this is that whne they say "investors" they don't mean Joe and Sally Furd from Topeka.  The investors who bought those instruments were all professionals who could just as well themselves bought insurance against default.


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OfflineMr.Al
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Re: SEC sues Goldman Sachs for fraud [Re: zappaisgod]
    #12409014 - 04/17/10 01:20 PM (13 years, 11 months ago)

I certainly don't own enough to warrant a vault.  (Just a little gold and silver, I would like some platinum and palladium because they are necessary for emerging safe nuclear energy and would therefore be very valuable...)

I have just done my homework in regards to the economic storm brewing and am doing my best to prepare. 

You should do the same.

Edited by Mr.Al (04/17/10 01:22 PM)

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Offlinezappaisgod
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Re: SEC sues Goldman Sachs for fraud [Re: zappaisgod]
    #12409018 - 04/17/10 01:20 PM (13 years, 11 months ago)

http://justoneminute.typepad.com/main/2010/04/when-you-assume.html

Quote:

But to be fair, if the SEC had the smoking email or memo in which Goldman specifically presented Paulson as a long investor they would have presented it.  And the trial should be fun (if we get that far) be fun, as the SEC attorneys try to get the ACA people to admit to being dupes and fools.

Still, if the Goldman defense is that their high priced smoke and fog generators worked, well, good luck with that.  But the SEC is going to insist that disclosure means more than creating a mis-impression and then failing to correct it.




When the Enron shit was going down there was clear financial shenanigans going on regarding the transfer of assets and losses in and out of various balance sheets.  That was clearly fraudulent.  But there was also a great deal of outrage about how they got over on California with completely honestly brokered energy deals.  I laughed.  California is obviously governed by a whole bunch of vacant valley girls and they got what they deserved.


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InvisibleShins
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Registered: 09/15/04
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Re: SEC sues Goldman Sachs for fraud [Re: zappaisgod]
    #12410577 - 04/17/10 06:29 PM (13 years, 11 months ago)

Apparently Goldman also aided and took advantage in Greece's demise.

http://www.nytimes.com/2010/02/14/business/global/14debt.html

Quote:

records and interviews show that with Wall Street’s help, the nation engaged in a decade-long effort to skirt European debt limits. One deal created by Goldman Sachs helped obscure billions in debt from the budget overseers in Brussels.




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InvisibleShins
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Re: SEC sues Goldman Sachs for fraud [Re: zappaisgod]
    #12410617 - 04/17/10 06:40 PM (13 years, 11 months ago)

Max Keiser has been screaming alarm about this stuff for years.

Max Keiser takes offense to Goldman Sachs story (pt1 of 2)


Max Keiser takes offense to Goldman Sachs pt2 of 2 oligarchy


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Offlinezappaisgod
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Re: SEC sues Goldman Sachs for fraud [Re: Shins]
    #12410810 - 04/17/10 07:27 PM (13 years, 11 months ago)

Quote:

Shins said:
Apparently Goldman also aided and took advantage in Greece's demise.

http://www.nytimes.com/2010/02/14/business/global/14debt.html

Quote:

records and interviews show that with Wall Street’s help, the nation engaged in a decade-long effort to skirt European debt limits. One deal created by Goldman Sachs helped obscure billions in debt from the budget overseers in Brussels.






Took part in Greece's demise?  The only agency responsible for Greece's demise is Greece.  They're the ones who spent all their money and hid it from the rest of Europe.  That's like a murderer blaming the gun dealer who legally sold him a gun.


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Offlinezappaisgod
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Re: SEC sues Goldman Sachs for fraud [Re: zappaisgod]
    #12410817 - 04/17/10 07:28 PM (13 years, 11 months ago)

"Well Goldman Sachs are scum."  Sounds like just another loser who couldn't figure it out.


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Invisiblememes
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Re: SEC sues Goldman Sachs for fraud [Re: zappaisgod]
    #12410849 - 04/17/10 07:37 PM (13 years, 11 months ago)

Quote:

zappaisgod said:
The only agency responsible for Greece's demise is Greece. 




Yeah, i'm not sure how you pay public sector employees 96% of their salary as retirement pay and expect to remain financially viable.

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Offlinezappaisgod
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Re: SEC sues Goldman Sachs for fraud [Re: memes]
    #12410865 - 04/17/10 07:41 PM (13 years, 11 months ago)

That's only part of it.  Entitlements kill.  Look at all of the PIGS, or rather PIGIS.  Ireland is kinda fucked too.  Which is sad because they were doing so well for awhile.


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Invisiblememes
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Re: SEC sues Goldman Sachs for fraud [Re: zappaisgod]
    #12410957 - 04/17/10 08:04 PM (13 years, 11 months ago)

Ireland hasn't been having any problem making needed cuts.  They're reforming the fuck out of everything they can, last I read

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Offlinezappaisgod
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Re: SEC sues Goldman Sachs for fraud [Re: memes]
    #12413423 - 04/18/10 07:25 AM (13 years, 11 months ago)

Good for them.


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OfflinegeokillsA
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Re: SEC sues Goldman Sachs for fraud [Re: zappaisgod]
    #12413916 - 04/18/10 10:17 AM (13 years, 11 months ago)

Quote:

zappaisgod said:

The investors who bought those [CDO's from Goldman] were all professionals who could just as well themselves bought insurance against default.



This is an important distinction, and likely one of the contributing factors as to why the SEC didn't
bring criminal charges against Goldman.  The fact that this wasn't settled privately before going to
court would indicate that Goldman feels confident about their case.  The people that bought these
CDO's from Goldman were sophisticated fund managers that would surely have understood the
common truth that there is always someone on the other side of the trade.  That is what makes a
market, somebody buys while somebody else sells.

The complete response from Goldman, that you probably won't find in any major media outlet:
Quote:

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.

We want to emphasize the following four critical points which were missing from the SEC's complaint.

  • Goldman Sachs Lost Money On The Transaction. Goldman Sachs, itself, lost more than $90
    million. Our fee was $15 million. We were subject to losses and we did not structure a portfolio that
    was designed to lose money.

  • Extensive Disclosure Was Provided. IKB, a large German Bank and sophisticated CDO market
    participant and ACA Capital Management, the two investors, were provided extensive information
    about the underlying mortgage securities. The risk associated with the securities was known to these
    investors, who were among the most sophisticated mortgage investors in the world. These investors
    also understood that a synthetic CDO transaction necessarily included both a long and short side.

  • ACA, the Largest Investor, Selected The Portfolio. The portfolio of mortgage backed securities in
    this investment was selected by an independent and experienced portfolio selection agent after a
    series of discussions, including with Paulson & Co., which were entirely typical of these types of
    transactions. ACA had the largest exposure to the transaction, investing $951 million. It had an
    obligation and every incentive to select appropriate securities.

  • Goldman Sachs Never Represented to ACA That Paulson Was Going To Be A Long Investor. The
    SEC's complaint accuses the firm of fraud because it didn't disclose to one party of the transaction
    who was on the other side of that transaction. As normal business practice, market makers do not
    disclose the identities of a buyer to a seller and vice versa. Goldman Sachs never represented to
    ACA that Paulson was going to be a long investor.


Background

In 2006, Paulson & Co. indicated its interest in positioning itself for a decline in housing prices. The
firm structured a synthetic CDO through which Paulson benefitted from a decline in the value of the
underlying securities.

Those on the other side of the transaction, IKB and ACA Capital Management, the portfolio selection
agent, would benefit from an increase in the value of the securities. ACA had a long established
track record as a CDO manager, having 26 separate transactions before the transaction. Goldman
Sachs retained a significant residual long risk position in the transaction.

IKB, ACA and Paulson all provided their input regarding the composition of the underlying securities.
ACA ultimately and independently approved the selection of 90 Residential Mortgage Backed
Securities, which it stood behind as the portfolio selection agent and the largest investor in the
transaction.

The offering documents for the transaction included every underlying mortgage security. The
offering documents for each of these RMBS in turn disclosed the various categories of information
required by the SEC, including detailed information concerning the mortgages held by the trust that
issued the RMBS.

Any investor losses result from the overall negative performance of the entire sector, not because of
which particular securities ended in the reference portfolio or how they were selected.

The transaction was not created as a way for Goldman Sachs to short the subprime market. To the
contrary, Goldman Sachs's substantial long position in the transaction lost money for the firm.




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