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Offlinephi1618
old hand

Registered: 02/14/04
Posts: 4,102
Last seen: 13 years, 9 months
Goldman case
    #12423633 - 04/19/10 10:03 PM (13 years, 10 months ago)

There is an interesting case the SEC is bringing against Goldman Sachs right now.

The case is focus on the ABACUS CDOs. Basically, there are three players in the drama: Goldman, John Paulson, and ACA, the manager of the CDO.

Goldman Sachs, you know.
John Paulson is a hedge fund manager who made over 3.5 billion dollars in 2007, and over 2 billion in 2008 and 2009; his profits in 2007 came primarily from selling CDS on CDOs (i.e. - shorting the housing markets on a massive scale).
ABACUS was a brand of CDOs managed by ACA. 

Without going into too much detail, the issue is that Paulson helped select assets for a CDO that he was short, and it's not clear that the investors in the CDO were aware of this.

There are several parties involved, but the way I look at it is this: Investors were told by a manager (ACA) that the underlying assets in the CDO were good, and that anyway their risk could be defrayed by the structure of the CDO. The investors assumed that the manager was reasonably diligent in selecting good assets, and invested their money. However, the manager had selected the assets on the advice of Paulson, via Goldman.

The investors believed that the assets were selected for quality, or at least randomly; in fact, they were selected by a person who was short the assets.

It should come as no surprise that they lost their money.

Is Goldman legally culpable? My instinct tells me that they are not; they are too smart to break the law, and they are too influential in making the laws. However, this type of deceptive transaction should be illegal, and according to my system of ethics Goldman and Paulson are clearly in the wrong.

Here are some interesting links, if you want to know more:

http://www.interfluidity.com/
Good for basic understanding of what probably happened, and the probable motivations; not factual

http://www.theconglomerate.org/2010/04/did-goldman-deceive-the-collateral-manager-why-it-matters.html
Good article

http://economicsofcontempt.blogspot.com/2010/04/quick-and-alas-non-substantive-word.html
An actual securities lawyer, who's probably right.
His opinion:
Quote:

Unless the SEC is holding back an absolute smoking gun, which is unlikely, Goldman is going to knock this weak shit out of the park....
My sense is that they're thinking, "You know what? The know-nothing talking heads can get all huffy if they want, but we're right, and they're wrong, and we've had just about enough of this shit. We're taking it all the way!" [Cue the rah-rah blast emails.]




My opinion is: if what Goldman and Paulson did wasn't illegal (and it probably wasn't, but the courts will decide based on more evidence than is currently publicly available), it should be.


Edited by phi1618 (04/19/10 10:26 PM)


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Offlinezappaisgod
horrid asshole


Registered: 02/11/04
Posts: 81,741
Loc: Fractallife's gym
Last seen: 7 years, 8 months
Re: Goldman case [Re: phi1618]
    #12425393 - 04/20/10 08:51 AM (13 years, 10 months ago)



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OfflineI AM SWIM
doin' thangs
 User Gallery


Registered: 12/24/08
Posts: 9,999
Loc: Feels Changsta Man
Last seen: 8 hours, 34 minutes
Re: Goldman case [Re: zappaisgod]
    #12445518 - 04/23/10 06:02 PM (13 years, 9 months ago)

lol goldman sachs sounds like goldman sucks


goldman isn't goodman


Goldman < :feelsgoodman:


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