This page has been archived and commenting is disabled.
Goldman Shares Poised to Fall After Rising on False SEC Settlement Rumor
By Static Chaos
Since the SEC's probe, Goldman Sachs Group Inc. shares have dropped more than 20%, but reversed course on Friday rising as much as 5.4%. (See Chart)
Reuters reported market sources confirmed that the jump in Goldman shares was based on rumors that the bank might be close to a settlement with the U.S. Securities and Exchange Commission [SEC] and because the stock is oversold.
The SEC has charged Goldman of creating and marketing a debt product linked to subprime mortgages crisis without telling investors that a prominent hedge fund helped choose the underlying securities and was betting against them.
While it is nice to learn that Blankfein told India’s Economic Times that he regrets participating in transactions that "brought too much leverage into the world," the posturing does not change the fact that his firm breached its fiduciary duty to investors, and knowingly unloaded the subprime crisis from Goldman's balance sheet onto the markets and taxpayers.
Meanwhile, for those basting in the euphoria of Friday's rebound in the financials, thus believing Goldman's shares are oversold, I'm happy to reiterate that the downward trend from the technical chart (see above) remains intact.
»
- advertisements -
The March 2009 lows won't hold.
Updated DOW daily and weekly charts:
http://stockmarket618.wordpress.com
http://www.zerohedge.com/forum/latest-market-outlook-1
But who was surprised by the rumor of a multi-billion dollar back room settlement without admission or denial of guilt? The public discovery and open court aspects of the judicial process are so little people. The slant implying that the SEC was facing an uphill battle in justifying the fine was pure Goldman. Like the aggressively stupid feigned ignorance of the bumps on the log who testified at the Senate herring.
Henceforth, If people want to do any business with GS or a bank of their ilk, they know what they are in for. If you buy their products or their stock-you know what you are getting.
It appears from the chart above that more than one person/firm has figured that out -- regardless of the SEC outcome. They are hereafter tainted.
There is no fiduciary duty for a market maker as they sell existing securities. It may or may not fall under a classification of fiduciary or just outright fraud when a customer asks for a product that a company simply can't provide. In this case the buyer wanted little to no risk. He wanted a triple AAA rated security with a high yield. Goldman had a choice. They could have said , no product like that exists, or they could fraudulently create it with the help of a person who knew the product would fail in delivering on the expectations of the buyer.
Goldman knowing this product was designed to fail and not disclosing it as a pertinent fact that they were not delivering a product that had the safety of a triple AAA rated security. Instead A hedge fund owner who shorted real-estate by CDSs on CDOs was the main creator of this product who's paid a fee to Goldman to assure that the security was designed to his specifications then depended on Goldman to sell the security.
One can only imagine what this call would have yielded in buyers: "Hi, this is Lloyd with GS, I have a CDO with a 8% yield. Interested? Well there is one thing we need to tell you aside from the usual disclosures, this security was designed and created by Paulson and Co who is getting bloody rich shorting CDOs and those are CDOs he had no part in creating. Ha, Imagine what 's stuffed inside of this baby. But hey, you never know, he hasn't lost yet but maybe this will be his first one. You don't buy pink sheet penny stocks for the same reason your not buying this? Click. Whistle as we work, hmmm, must be a sucker in here that doesn't understand this stuff.."
There was no risk for the creator of the product only lottery like returns on investment. The buyer of that security surely didn't want to buy a security that was a guaranteed failure. So this nonsense that Goldman was delivering the risk the buyer wanted should be called for what it is , outright securities fraud and if Goldman actively managed the buyers account and took responsibility then yes a fiduciary agreement wouldn't have to be written.
Just as the board of directors in a Company don't have to sign an agreement that they are fiduciaries for stockholders, it is implied in that role and many have been on the losing side of that argument in court.
Since no one has shown me the relationship of the buyer to Goldman Sachs, I'll have to go with patterns and practice and assume that there was a disclosure requirement that would make selling fraudulent securities impossible and yes a fiduciary duty to that client since they weren't in a role of a simple Market Maker since they peddled a security they had a hand in creating. As all the risks have be disclosed on any security, Goldman failed to do so and by the emails , they knowingly failed to do so. The intent then was fraud. Nothing else can be explained by the behavior as it also goes into patterns and practice.
"Selling them they risk they wanted" is such bullshit, it can't be overemphasized enough. No buyer knowingly will buy a product that is designed to fail under the pretense that that was "the risk that they wanted". Lottery tickets would have been a better bet and safer. How about plane tickets. No one buys plane tickets if there is 100% confidence the plane will crash. If the airline knows the plane is going to crash and sells them anyway, they have a smoking hole in parking lot size legal problems.
One can argue about fiduciary duty, but there are many cases where people are fiduciaries without signing any specific agreement. A Director of a Public Company comes to mind. Even a private company with many shareholders.
Even without it, the charge of securities fraud is enough unless Shapiro gets too confused between peeps of porn and defining what the role of Market Maker is and what it isn't
GS did NOT have a fiduciary duty. A fiduciary obligation exists whenever the relationship with the client involves a special trust, confidence, and reliance on ithe fiduciary to exercise his discretion or expertise in acting for the client. The fiduciary must knowingly accept that trust and confidence to exercise his expertise and discretion to act on the client's behalf.
When one person does agree to act for another in a fiduciary relationship, the law forbids the fiduciary from acting in any manner adverse or contrary to the interests of the client, or from acting for his own benefit in relation to the subject matter.
GS created and marketed debt products for CUSTOMERS who desired a product. IF the customer wanted to retain GS as a fiduciary advisory, THEN GS would be libel.
IMO, since the benefit of the doubt is given to the accused - remember, innocent until proven guilty, the mere fact none of the customers could produce such an agreement tells me that there was no fiduciary duty obligation.
I am not making a comment on GS' ethics or business practices, or the duties of the customers and clients; we all know the intelligence of the latter.
What I know is this, for a commentary to assert GS had a fiducairy duty tells me a LOT more about the commentator than his subject.
Knight
wait till you see how much of the secret $2 trillion Goldman got.
"...brought too much leverage into the world,"
Hahahhaa. Who the fuck made him CEO?
In some cases, you just kind of wonder if the last round of guys running the world and various major corporations just went looking for a fall guy.
Goldman's stock....mark it zero, dude.
They're calling the cops man, put the piece away.
Goldman show will continue till everybody get scared
I had some June calls on GS and I noticed that they were going up in price even when the stock was loosing ground.
I was gonna sell them during the uptrend, but this strange pricing changed my mind.
I hope I did the right thing. Will see at the June expiration.
I'm not much on technical analysis, but that chart sure looks ugly to me.
Definitely BFU, but a little shenanigans (for which GS is famous) can pull them out of the trash can -- and trust me, this Coon knows trash.
huge accumulation last wednesday afternoon during last 2 hours of market day confirms that from an external and a technical point of view the market is due for a rebound short term before a continued downward trend. Goldman should benefit from this. Additionally, any fed reg is already priced into the market which may result in a viscious little rebound if you are short.