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SEC Charges Goldman Sachs With Fraud On Subprime Mortgages, Paulson & Co. Implicated

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Fri, 04/16/2010 - 10:44 | 303906 Nolsgrad
Nolsgrad's picture

great post!

Fri, 04/16/2010 - 10:51 | 303941 El Hosel
El Hosel's picture

Does this mean we ( the US Gov ) are going to re-criminalize fraud on a wide scale?

Fri, 04/16/2010 - 11:19 | 304086 -1Delta
-1Delta's picture

WHO CARES THE SPX IS FINALLY F****** DOWN!!!!!!!!!!

Fri, 04/16/2010 - 21:10 | 305059 Cognitive Dissonance
Cognitive Dissonance's picture

Of course, this could all be made to disappear if a middle east shooting war were to appear.

You don't think those news stories about an "imminent" war were just a coincidence, do you?

Fri, 04/16/2010 - 21:10 | 305060 IBelieveInMagic
IBelieveInMagic's picture

This story explains why Ambac (ABK) has been rocketing up for the last week -- insider trading at it's best. SEC will of course do nothing about such regular frauds.

Sat, 04/17/2010 - 03:38 | 305361 dumpster
dumpster's picture

more information ..

 

the forward sniffing stock market lol a

April 17 (Bloomberg) -- Goldman Sachs Group Inc., which fell 13 percent yesterday after U.S. regulators announced fraud accusations, didn’t disclose that it was warned nine months ago that investigators wanted to bring a case, people with direct knowledge of the talks said

Sat, 04/17/2010 - 06:35 | 305396 Ned Zeppelin
Ned Zeppelin's picture

I was wondering about that. This fraud case is very simple and the suit tells a compelling story if the base facts are true: 10b-5 fraud, and it is a material amount, $1B.  (Anyone who says the case is weak has either not read the complaint, or has and is in GS's thrall.) The next step is that the possibility of suit and the strong probability of a recovery should have been disclosed by GS Inc. to all of the potential buyers and sellers of GS INc. stock.  This is a securities plaintiff's lawyer's wet dream case.  That part of this may serve to bring GS down. You heard it here first. 

Fri, 04/16/2010 - 11:24 | 304107 ArkansasAngie
ArkansasAngie's picture

NOpe they are asking for money not jail.

The money will come from Goldman's investors.

I'm good with a confiscation of personal property and clawback of all bonuses paid but ... I also would like to see jail.

 

 

Fri, 04/16/2010 - 11:45 | 304152 Ripped Chunk
Ripped Chunk's picture

Jail is a requirement to keep the natives from becoming restless.

A list of fall guys is probably already compiled.

Fri, 04/16/2010 - 12:19 | 304210 WaterWings
WaterWings's picture

I wonder how many years this will take and if this is a diversion...

Sorry, ZH has allowed me to metamorphose into a 100% cynic. Nothing short of public executions will please me.

Fri, 04/16/2010 - 15:25 | 304510 Ripped Chunk
Ripped Chunk's picture

If I may: "The great mid-term elections ratings sweep must see TV spectacular"

 

 

Fri, 04/16/2010 - 22:32 | 305154 Clinteastwood
Clinteastwood's picture

Right. A veto-proof majority in both houses of Congress for the Rip-off Publicans, who would have to do the will of the people............or else they'd know we'll rip them.

Sat, 04/17/2010 - 00:43 | 305283 ZakuKommander
ZakuKommander's picture

"Would have to do the will of the people"??????

In what alternative universe would this happen?

Fri, 04/16/2010 - 18:53 | 304881 thegreatsatan
thegreatsatan's picture

nah, you're not cynical enough. any fines would be paid with money GS borrows from the Fed at 0%

Sat, 04/17/2010 - 03:43 | 305363 dumpster
dumpster's picture

Sorry, ZH has allowed me to metamorphose into

Franz Kafka .. become a beetle in the closet

Fri, 04/16/2010 - 12:28 | 304236 Miles Kendig
Miles Kendig's picture

How does one incarcerate a company?  This is the issue that renders the legal process of turning a corporation into a person false.

Fri, 04/16/2010 - 12:50 | 304286 Commander Cody
Commander Cody's picture

At the expense of being branded a lunatic, let's try to use logic here: Since a corporation has the rights of an individual, it also is liable as is an individual; therefore, everybody goes to jail.

Sat, 04/17/2010 - 01:36 | 305323 Wilderman
Wilderman's picture

At what point did we, as a society, conclude that violating moral code (our common belief of right vs. wrong) is was acceptable, when it did  not violate any legal statutes?

 

Most all of the business dealings I've had in the previous 10 years involved shadings or lobbying of the laws or rules, in attempts to save clients money, but, not once, did I shade or stretch rules in order to screw someone else.  You can break the rules all you want, but there better not be any aggrieved parties.  It there are, man, you are f*&ked.

 

Our legal system, our legal code, and the lawyers/lobbyists/politicians that clog it up have created a universe where dirty deeds are dirt cheap, and, not illegal. 

 

 

 

 

Sat, 04/17/2010 - 06:45 | 305398 Ned Zeppelin
Ned Zeppelin's picture

Rule 10b-5 fraud is simple and elegant: the failure to disclose a material fact to an investor. Do you think it was material to disclose that Paulson hand picked the basket of CMBSs from which ACA would choose the reference securities, and that Paulson made known its intention to short the living  sh*t out of them? Would you want to know that GS made falso statements to ACA to the effect that Paulson would be long the "equity" tranche of the CDO issuance, to assuage their concerns about Paulson's involvement? I would have wanted to know that.

Done, done, done from a 10b-5 perspective.  GS does not wiggle out from under this one.  It is not a witch hunt, or sort of shaky, or not quite right. The allegations are dead on, and no doubt easily proved.  That is the purpose of 10b-5: a demonstration of intent is not required, only a failure to disclose a material fact.  Read the complaint: GS hid the Paulson side of the equation from the mark, er ha, investor. GS took steps to make sure ACA stayed in the deal, knowing the mark was assured by the presence of an independent portfolio "expert" making the choices of reference securities.

Go ahead, don't be cynical: be outraged.

Sat, 04/17/2010 - 07:41 | 305419 parallaxview
parallaxview's picture

we are a nation of laws, not a nation of ethics.

Fri, 04/16/2010 - 17:55 | 304797 abalone
abalone's picture

So true Miles

'Corporations have neither bodies to be punished nor souls to be damnned'

Fri, 04/16/2010 - 20:33 | 305007 damage
damage's picture

Miles, so then I assume you are okay with politicians who are already in power, enforcing laws which limit the speech of non-profit political corporations?  Your statement is unebelievably ignorant. The corporation only derives its rights from the people who created it. Part of the rights of the individual is to group together and pool resources with other individuals, this is all a corporation is. To deny any corporation its right to free speech is denying the individuals who form the corporation's right to free speech AND their right to free association, and without corporate personage you wouldn't even be able to sue a corporation at all.

The issue you should be looking at is how individuals use corporations as legal shields against their own misdeeds. This is what needs to be changed. Go fucking read a book for once please.

Fri, 04/16/2010 - 21:05 | 305052 NP40
NP40's picture

Ever hear of a PAC ? It allows "individuals" within the corporation to pool their "own" money to voice political speech. They were never denied free speech. The case before the SCOTUS was very limited and was ruled on correctly, namely, their freedom of speech had been violated. The SCOTUS should have simply struck down the law that banned corporate speech within a certain time frame before an election. However, the SCOTUS has now ruled that corporations are entitled to use the entire company treasury to influence elections of all stripe. Congressional races, judegeships, etc.

This ruling has effectively crippled the free speech of the "individual." We, individually stand no chance of being heard among the corporate wheelbarrows of cash being driven around. One of the most horrendous rulings ever supplied by the SCOTUS.

A corporation is not person. If so, what language do they speak in ? English ? French ? Portugese ? When a corporation writes, what hand do they use ? The left or right ?

A corporation does not derive rights from those that created it. It's only an operating charter. Individuals within the corporation have the freedom of speech but a corporation itself has no rights except those entitled by contract or law.

 

Fri, 04/16/2010 - 22:36 | 305164 Clinteastwood
Clinteastwood's picture

SCOTUS is encouraging the well-educated US population to vote such that money doesn't buy elections.   Until our country gets this idea and gets it good, we'll never have free speech, or fair elections.  C'mon people, get with the program.

Fri, 04/16/2010 - 23:14 | 305214 damage
damage's picture

Exactly, the law prevented nothing, and only served to act as a protection mechanism for incumbents. Politicians were still bought out, with or without campaign finance reform.

Fri, 04/16/2010 - 23:24 | 305212 damage
damage's picture

Are you sure? I thought they kept the "soft money" bans in place. and only Thomas' partial dissent removed those bans. But I agree with Thomas. All "campaign finance reform" does is stack the deck against new blood in favor of the incumbents. It allows those already in power to limit their opposition's funding while still taking all the bribes they want since they run the system.

However, I think you are wrong that it removed the "soft money" bans (even if I agree they should be removed too)... you've just been taken by the MSM or idiots down at HuffPo or something...

 

Edit: I should also add the media had special exemptions for themselves carved out, which is exactly why the media bashed this decision so hard, because they would still be unrestricted either way. (media corporations)

Sat, 04/17/2010 - 21:53 | 306239 Miles Kendig
Miles Kendig's picture

damage, you know that what I am saying is how can a corporation enjoy disparate treatment under the law with respect to loss of freedom through incarceration, with all of the rights that are limited for those that are, including speech and still claim equality under the law. Can you explain this one to me without moving the subject from violations under the law and their punishments to enjoyment of speech?  

Fri, 04/16/2010 - 22:55 | 305192 Dburn
Dburn's picture

Good point. Good time to test the Corporate Personhood theory. Here's one for the legal guys here. If they are still a regulated bank they really can't file a Chapter 11. That would be my choice of actions if the lawsuits mounted. Call it the great final rape pillage and plunder as they toss back their bank status ( Hey , we just don't need it anymore thanks) , file an eleven and the managing directors lay in one huge priority claim on unpaid wages as their brand new supersonic jets rev up outside the courtroom to whisk them the fuck out of there .

Criminal Charges would have to be filed then or would they still get away with it. I know I'll really be pissed if they get the office furniture too. How about last minute sex change operations. It's in each Managing directors health insurance policy. How long do those take? Sounds like they'll need them, Jail or otherwise.

Mon, 04/19/2010 - 23:17 | 308960 hbjork1
hbjork1's picture

It is a civil suit.  There can be recovery of losses and damages. GM and Ford were sued by enterprising car owners for decades.  Toyota is currently being sued in CA.

Individuals are found guilty of fraud and sent to jail.

Kinda hard to put a company in jail.

 

Sat, 04/17/2010 - 08:28 | 305425 Richard Weed
Richard Weed's picture

Love you to death, Chunk, but it's "restive" not "restless"... as in, "the natives are restive"...

I know... I know... I am a Dick Weed.

Fri, 04/16/2010 - 16:09 | 304600 Thurifer
Thurifer's picture

The reason the Goldmanites aren't scared is because they think that the populist threat to them comes from the pacifist girly men on the left. But as a resident of rural Alabama I can tell them that there are many, many heavily armed men here who are walking breathing definitions of the term "beefsteak nazi". Be afraid GS, be very afraid. s

Fri, 04/16/2010 - 22:57 | 305197 Dburn
Dburn's picture

It's Deliverance time

Cue Dueling Banjos. Lloyd gets to play Ned Beatty. He always wanted to be a star.

Mon, 04/19/2010 - 23:39 | 308971 hbjork1
hbjork1's picture

People with a foot in the South will know what you mean but, no matter how serious they are it will be better for them to stay in the world they know.

Back in the late 60's, there was a article (note) in Time (magazine) about two"boys" from what was apparently New Jersey syndicate that may have been sent down to "organize" the moonshine business in Northern Georgia. I no longer remember the details.  It is easy to get lost in those mountains.  It seems that they were found in a snake pit.  Died of snakebite.  Probably just got lost and fell in.

 

Fri, 04/16/2010 - 18:19 | 304836 Rip Toff
Rip Toff's picture

Maybe in honor of Arnie and CA IOUs, they can pay the fines in mark-to-fantasy paper!

Fri, 04/16/2010 - 12:16 | 304148 Mark McGoldrick
Mark McGoldrick's picture

Imagine you and your friend sell baskets of apples.

Your friend purposely puts poison in some of the apples, while you (knowing of the poison) continue to sell those apples.  Additionally,  you tell your customers that these particular apples are the most delicious that you've ever had for sale. 

Then that same devious friend of yours buys life insurance contracts on those customers who ate the apples. Your customers die as expected, and your friend makes billions of dollars in profits off of those insurance contracts. 

Then everyone in the apple industry marvels at how smart the both of you are.  And you spend the next two years pretending that you're the Master of the Universe. 

Fri, 04/16/2010 - 14:46 | 304453 Whats that smell
Whats that smell's picture

Good one, best way I have heard it explained!

A village mayor grew tired of complaints about freight trains blocking the villages blocking the town's only crossing. Under a local law on the books he could ticket them and the fine was about $200.

People knew he wrote them at least one ticket a week, and the town collected the $200. Once they figured out how to give the RR the bill.

People said "I can't beleive they still block the crossing" It was  just like they alway s did before the tickets were issued.

Would you quit running stop signs if you were fined $.10?

Fri, 04/16/2010 - 16:55 | 304700 faustian bargain
faustian bargain's picture

I would quit running stop signs when I saw that there was traffic going the other way, regardless of the fine.

Fri, 04/16/2010 - 18:17 | 304834 Gold...Bitches
Gold...Bitches's picture

one flaw.  just because the apples are poisoned in no way automatically precludes it from being a delicious apple.  You just aint gonna make it long enough to have a second one...

Fri, 04/16/2010 - 11:50 | 304151 Mark McGoldrick
Mark McGoldrick's picture


Fri, 04/16/2010 - 12:17 | 304204 Winston Smith 2009
Winston Smith 2009's picture

No, not at all. The legalized Mark to Myth accounting fraud will continue along with innumerable other crimes, many of them even being committed by government agencies, that are being ignored and will almost certainly continue to be ignored.

Fri, 04/16/2010 - 14:01 | 304369 Gold...Bitches
Gold...Bitches's picture

First, if there is no jail time and its just a fine, then its a travesty.  Second, if this is the only one or one of just a few, then its a sham.  Third, if there is no action by the CFTC regarding JPM and the massive silver manipulation, then its a travesty of a mockery of a sham of a mockery of a travesty of two mockeries of a sham. 

 

Jail time, lots of jail time.  And not just a couple scapegoats.

Fri, 04/16/2010 - 18:21 | 304842 Vendetta
Vendetta's picture

Agree. The 'fines' the government has 'dished' are so measly that they've simply been categorized by these businesses as a cost of doing business.

Sat, 04/17/2010 - 02:22 | 305345 Wilderman
Wilderman's picture

Never like to piss on a candle, but civil actions carry no penal weight (kinda like most lawyers lol).  We need criminal prosecution by NYC, NJ, NY State, hell, even DOJ in order to see 'perp walks'.  Damned shame, there once was honor among men (no, really, I've read so many novels...).

 

 Circus won't be complete without some deserving sinners being tossed to the lions.

Sat, 04/17/2010 - 07:50 | 305423 cossack55
cossack55's picture

Are you saying 6 wrongs make a right? Or 8 wrongs make a -2 rights, or -6 rights make +12 wrongs?  Please elaborate?

Fri, 04/16/2010 - 14:47 | 304455 SayTabserb
SayTabserb's picture

Fried vampire calamari.  The appetizer or the whole meal?

Fri, 04/16/2010 - 14:57 | 304476 sgt_doom
sgt_doom's picture

Negative!  It means the 2010 elections are coming in November 2010, and the pols want to look like they are actually doing something???

Then, after the election, the case quietly, like all the others, evaporates.  (With the only people going to jail being Bradley Birkenfeld, the UBS banker who attempted to be a whistleblower on all those American tax evaders, including most of those politicians in Congress who call the shots on the SEC, et al., and the NSA wiretapping whistleblower, I think his name is Thomas Drake.)

Paulson & Co., isn't that Alan Greenspan's company???  Figures.....

Fri, 04/16/2010 - 22:40 | 305168 Clinteastwood
Clinteastwood's picture

You wouldn't have all this bullshit if you had a currency based on gold. No derivatives!  Gold bicheses!

Sat, 04/17/2010 - 09:38 | 305470 ToNYC
ToNYC's picture

There was not enough Gold to make a modern society currency in 1968 and 1971...without enriching the miners for no special reason. We don't need to be worshipping the basis of our currency..It is a tool to trade around between specialised labor-efforts, stored human work-energy. What we do need is a Congress that has a computer program to exercise its Constitutional function by making sure the fiat currency is tied to maybe 2% growth in real GNP. Gold is so Old Testament for currency, forget about Old School.

 

http://www.zerohedge.com/forum/golden-rule-superceded-government-alchemy

Sat, 04/17/2010 - 12:12 | 305698 tip e. canoe
tip e. canoe's picture

gold just wants to be free

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