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Did Goldman Lie To Calpers When Seeking Consulting Mandate?
Remember long ago in late April when people actually discussed Goldman Sachs and its criminal charges of CDO fraud? Not really? Now may be a good time to remember what some said was the biggest fraud investigation in history, because according to new developments not only is Goldman still in very hot water (Fox Business disclosed earlier that the SEC added veteran litigator David Gottesman to its group of attorney trying the Goldman case), but according to a new report by Reuters' Matt Goldstein, the firm lied to Calpers in March, when it was seeking a consulting mandate from the pension giant, claiming it was not "the target of a formal investigation." Calpers apparently is not too happy about this: "Calpers spokesman Brad Pacheco told Reuters the pension fund's investment staff "will be reaching out to Goldman for an explanation on their response." The investment staff is finalizing contracts for Calpers' consultant pool, which will be effective July 1." Needless to say, Goldman's chances of taking a slice out of Leon Black's pie are looking bad to quite bad.
From Reuters:
Goldman Sachs Group Inc, seeking a consulting mandate from Calpers, assured the pension fund giant in March that it was not "the target of a formal investigation," according to a document obtained by Reuters.
That was six months after U.S. securities regulators notified the powerful Wall Street bank that it was likely to be charged with fraud in connection with the underwriting and marketing of a $1 billion subprime-mortgage-linked security.
Goldman's response to Calpers could reignite the debate about whether the Wall Street firm had an obligation to inform shareholders and potential clients that the SEC had sent it a so-called Wells Notice -- a letter alerting the firm of the likelihood of a regulatory enforcement action.
Pacheco said Goldman is one 32 firms the giant pension fund is considering to serve as consultants on real estate-related investments. He said Calpers has not yet made a decision about hiring Goldman or any of the other firms and that its investment staff is in the process of finalizing contracts for the consultant pool.
A Goldman spokesman declined to comment.
Goldman previously has said it did not disclose the Wells Notice in regulatory filings because its lawyers concluded the issue was immaterial to the firm's overall revenues.
Goldman's application to Calpers, obtained by Reuters, was not submitted under oath, and it is not known if the document was reviewed by Goldman's counsel's office. The application is signed by Kristin Gannon, a Goldman managing director and West Coast head of real estate investment banking for the firm.
Goldman's comment on the Calpers application that it was not the target of a formal investigation was made in response to a question seeking information about "any business litigation or other legal proceedings relating to your consulting activities."
The punchline from the Goldman application:
"Our experience shows that if we serve our clients well, our own success will follow," the firm wrote. In response to another question, Goldman said it "treats all of our clients as partners."
How about giving all of its client "partners" immediately vesting shares of Goldman stock to go with that promise? That should resolve all issues about not only how incentivized everyone is to go along with the Goldman monopolistic monolith, but will remove any and all future conflicts of interest. In fact, Goldman should just offer its clients a pass thru option of its BHCs status and give everyone a cut of its borrowings from the Fed's discount window. If Goldman continues trading as a government backstopped hedge fund, and if the corrupt politicos refuse to do anything to prevent Goldman from blowing up the world economy once again, perhaps the prudent thing is to allow the next megacrash to occur faster by lowering the entire world's cost of capital to zero, so that everyone can buy what GS says to buy and vice versa. In fact, Goldman should just allow open access to all client-partners who wish to trade on its prop trading desk. That way the bar will be set equal to everyone. No more lawsuits against the firm ever again.
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Goldman uses it's Monopoly status to self deal, period..
"I didn't know"
SCHLECHT:
http://williambanzai7.blogspot.com/2010/06/schlecht.html
Plausible deniability.
I didn't bother to check.
Poor Calpers. It's like a big old tuna choosing which great white shark to hop into the aquarium with.
Bah, Tuna eat squid....
This is more like a water buffalo picking which evaporating pool of water to take a sip out of....the one with a killer croc in it....or.....the one with......a killer croc in it.
Pfft - it would be news if Goldman didn't lie to someone. No?
The dog said it was ok...
With partners like Goldman, who needs enemies?
Tha Squidsters meant that is they serve their clients well done...with a fork in 'em.
Stinger missile of a reply, Duuude...
"He thinks the carpet pissers did this?"
Goldman = Carpet Pissers:
GS: "Okay. The old man told me to take any rug in the house."
"Goldman previously has said it did not disclose the Wells Notice in regulatory filings because its lawyers concluded the issue was immaterial to the firm's overall revenues." - Ain't that the truth. Fraud conviction over a $1 billion subprime product will ultimately result in a fine to the tune of tens of millions? Maybe a couple hondo mill?
Ah, but the question before the house was not of materiality, but of a "formal investigation" or "complaint".
Even more likely, the chap(s) who made the rep and warranty to CalPers, probably knew nada, zip, zilch, zero, naught about the Wells Notice being served!
Oh, blasphemy, corporate misery!
Nonetheless, that's not an excuse, for the legal/compliance folk should have immediately let it be known to anyone negotiating any contract which even remotely might have contained such language, that something was "amiss".
You couldn’t be more correct in your assertion. I guess I am a bit on the cynical side. My defense is that I use cynicism to cover any possible enthusiasm that I may have in the formal prosecution of this corporate/government syndicated fraud.
And the man of the year 2009 for the Financial
Times was L.Blankenstein..
"Did Goldman Lie To Calpers When Seeking Consulting Mandate?"
do bears crap in the woods?
Does the Pope wear little red shoes?
Do farts smell?
Will I get wet if I jump in the water?
Does the sun set in the west?
Why do we continually trod such furrowed ground, revist sacred truths?
Because we like it?
Cause otherwise tha GDMFTB's at tha SEC will settle.
"Do Priests grope little boys?"
I think the analogy is fitting.....SEC like the Pope....Fed like the Vatican.
Can *any* regulatory filing be material to their revenues? I doubt it. So no disclosure of any and all Wells notices. Case closed.
But seriously, this what we need more of. The whales like Calpers refusing to lie in bed with Goldman. That's what will hurt their revenues. If these pension funds start dropping out, who will they fleece and frontrun then? The nature of thir response would be fun to watch indeed.
No kidding?!
Well at least Goldman's got a 'Chinese Wall', just not in the right place.
Goldstein, Goldman, Gottesman? Could they all be relatives?
CalPers has been getting fucked from more angles than you'd see in a Tijuana whorehouse.
Stupids with a few more tens of billions yet to evaporate down a black hole. These two ass wipe organizations deserve to hold each other as they swirl the bowl.
GS either not being truthful or hyping something they know is crap reminds me of the old Bob Arum story. Arum, a boxing promoter (need we say any more about his character) was extolling the virtues of one of his fighters right before a fight in an attempt to sell tickets. After the guy was proved to be inept by getting coldcocked by some tomato can, Arum denigrated the fighter saying he was never good anyway. Then he begins to extol the virtues of another one of his fighters, who, of course, had a fight coming up. When a reporter asked Arum how could anyone believe him, he said "Yesterday I was lying. Today I'm telling the truth!"
I believe former CA treasurer Kathleen Brown was/is? on the CALPERS board, I believe she's also a GS employee or consultant or something, she was also on the CFC board.
I think there's a benefit to having the seester of the CA AG on your board, apparently no state investigations from the CA AG of the entities that hire your seester or friends or donors.
I think she's on the CA Endowment board too, that's another multi billion dollar moneypot of other people's money with the only apparent oversight being the CA AG, (her brother Jerry -also a governor repeat candidate).
CA is one messed up state.
Excellent observations all.....and especially the last sentence.