SEC's Richard Ferlauto: Goldman 'Wishing It Wasn't A Public Company'

MBO (Buffet BO) next? Just headlines from Dow Jones right now.

Comments

[Bam_Man]

The Senior Managing Directors who would otherwise be "partners", not so much.

[knukles]

Hold the Press!

For anonymity, profit and wealth accumulation opportunities (albeit at lesser capitalization levels) a private ownership arrangement beats anything else hands down.

From an insulation of individual participant (directors and officers) to deleterious legal liability, a corporate or similar entity beats all, hands down.

What I believe the chap from the SEC meant to intone is that the folks at GS wished that the alleged misdeeds were never made public... regardless of form of ownership... a far different consideration, all together.

Brilliant.  Another astute public analytical pronouncement by a member of Wall Street's captive regulatory body.  No Doubt Another Dollop of Universal Knowledge gleaned for the Internet's Veritable Cornucopia of Porn.

[jkruffin]

Here come the investor lawsuits for Little Lloyd!!

On Monday April 26, 2010, 2:58 pm
By Alexandria Sage and Jonathan Stempel

SAN FRANCISCO/NEW YORK (Reuters) - Goldman Sachs Group Inc (NYSE:GS - News) and Chief Executive Lloyd Blankfein were hit with a shareholder lawsuit claiming they hid key details about a risky transaction that resulted in civil fraud charges and a plummet in its stock price.

Monday's lawsuit filed in Manhattan federal court accused Goldman of making materially false and misleading statements about an Abacus collateralized debt obligation tied to subprime mortgages that regulators say it created and marketed though it was designed to lose money.

The complaint also alleged Goldman concealed its receipt of a Wells notice last July from the U.S. Securities and Exchange Commission, indicating potential civil charges over Abacus.

According to the complaint, Goldman's actions caused its shares to trade at inflated levels. The shares fell 12.8 percent on April 16, wiping out more than $12 billion of value, after the SEC filed a civil fraud lawsuit against Goldman.

"For anyone to say this type of development is not something a reasonable investor would not want to know simply does not hold water," said Darren Robbins, a partner at Robbins Geller Rudman & Dowd LLP, which filed the complaint.

The lawsuit seeks class-action status and unspecified damages on behalf of potentially thousands of shareholders.

Goldman did not immediately return a call seeking comment. Other executives named as defendants are Chief Operating Officer Gary Cohn and Chief Financial Officer David Viniar.

Shares of Goldman were down $4.95, or 3.2 percent, at $152.44 in afternoon trading on the New York Stock Exchange.

BLANKFEIN TO TESTIFY

In its lawsuit -- which involved the same Abacus transaction -- the SEC accused Goldman of failing to tell investors that securities underlying Abacus were chosen by billionaire hedge fund investor John Paulson, who was betting that the securities would lose value.

Paulson made about $1 billion on Abacus, roughly the amount other investors are believed to have lost. Goldman called the SEC allegations unfounded and Paulson has not been charged.

Blankfein and Fabrice Tourre, a Goldman vice president believed to be the main creator of the Abacus transaction, are scheduled to testify before a Senate panel on Tuesday.

Democrats are using the case to try to gain momentum to tighten financial oversight, which President Barack Obama supports.

Robbins said Monday's lawsuit is the first securities fraud case filed against Goldman and seeking class-action status since the SEC sued. Legal experts expect others to follow.

The named plaintiff is Ilene Richman, a Goldman shareholder who Robbins said was "extremely troubled by the conduct that went on." She was not immediately reachable for comment.

Last week, Goldman was also hit with two shareholder derivative lawsuits accusing the bank's executives and board of breaching fiduciary duties. Shareholders bring derivative lawsuits on behalf of companies to enforce or defend rights that the companies fail to address on their own.

The case is Richman v. Goldman Sachs Group Inc et al, U.S. District Court, Southern District of New York.

[Hansel]

Lloyd ain' scurred. You should be.

AIG May Be on the Hook in Lawsuits Against Goldman Sachs Board - Bloomberg

[chet]

To make it all the way through sticking it to Goldman, only to find out the public is on the hook?  The populist uproar would be deafening. I have to think that DC would find some way to weasel out of that one.

[knukles]

Once upon a time, governmental regulations made it far easier than ever before to take criminal and civil action against a board of directors as opposed to the officers and employees of a corporation.  One of many of the laws which changed all this was called Sarbanes-Oxley.  Sure you're heard of it somewhere.  A net result was that it has become personally, quite risky to sit on a board of directors.    As a result, many very qualified folks quit sitting on boards.  Period.  In many cases replaced by....but that's another story for another time.    Partially as a result of said law as well as predecessors, it also became nigh impossible to attain D&O and E&O insurance coverage. (Director's and Officers, Errors and Omissions coverage)  In response, one firm (apparently) in particular, moved in to fill the void.  AIG.   AIG is now owned by you and me, the American taxpayer, after having been "bailed out" in total for obligations of a separately chartered operating subsidiary, AIGFP .  Uh, interesting how "we" became the owner, when the Federal Government had (some would allege) had no authority to assume ownership of an insurance company....but that's another story for another time.   Goldman Sachs is probably going to become the Poster Child for the "Not Really Doing God's After All Work Reason for the Regulatory Reform of the American Financial System", resulting numerous penalties and some very steep fines...."Regulatory Reform is Neither" by the way, but that's another story for another time.  The fines, by the way, will be paid to the Government, not anybody or organization directly injured by such (alleged) crimes.   AIG (apparently) carries Goldman's D&O and E&O insurance.   So whatever fines Goldman is penalized with, their insurance carrier which will (probably) pay the vast majority (allegedly) of such claims is.....are you really ready for this?   AIG  Which is owned by the US Government.    That's "us", gentle taxpayers.     So, the long and short is; Wall Street (allegedly) loots the investing universe, driving the global financial system to the brink of failure (so's been rumored) necessitating unprecedented governmental (read taxpayer funded) bailouts, followed immediately by record bonus pools, for which Goldman becomes the Poster Child, likely winds up paying unprecedentedly large fines, which in turn will (likely) be borne by a tax payer owned insurance company, which some allege had no business being owned by the government nor used (allegedly) as a conduit for massive (and in some people's minds highly suspect, so I hear) bailout payments.   Not to mention that the whilst all of such has been transpiring, said Wall Street firms (some say) have managed to engage Washington with Record Campaign Contribution and Lobbying (tax deductible) expenditures.   Uh huh.  We (gentle taxpayers) get robbed (allegedly), pay for the (alleged) robbers bailout, and foot the (alleged) robbers fines back to the government, all the while subsidizing  campaign contributions, and bonus pools .    Seems that some how, we (gentle taxpayers) come out on the very short hairy end of said lollipop here.  Nothing to see, move along.  

[chet]

Lawsuits are the only way to go, really.  The regulators and Congress have dicked around for 2 years.  The phase of pension funds, AIG and others going after the banks was only a matter of time.

Maybe it's for the best.  Resolve the whole mess in terms of who had what contracts with whom, and if they respected the terms/ committed fraud in disclosures, etc.  Let the weasels sue each other out of existence.

[Inspector Asset]

Ah yes, behind investment bankers, lawyers are like squid too. Maybe mold.

Let the lawsuiits begin.  Let these two groups, who do litlle but push paper and take paper, go to war with each other.

We'll just sit and watch.

[AccreditedEYE]

How the hell can we get long legal fees? There's an ETF for everything else but... lol

[Mentaliusanything]

Thats because no Lawyer has ever lost money. Who would take the other side?

[Steaming_Wookie_Doo]

Ilene Richman-- any relation to Linda Richman? Discuss amongst yourselves!

http://www.youtube.com/watch?v=QqPiJ0L7YmY

[ArkansasAngie]

So ... who is going to fund their purchase?  I'm not.

[Cursive]

They are probably shorting their stock and their CDS into oblivion.  Then they can take a fraction of their bezzle profits and take it private.  I know we've all been trained over the last 13 months that stocks only go up, but they will change soon enough.

[Mercury]

Bring back the Wall St. partnership!

The Sandy Weill giant, public, financial "supermarket" model has created zero net value for anyone who didn't get their hands on "friends & family" IPO stock.

[nonclaim]

The partnership is still there and doing well. It is the gigantic public (investment) bank that is on life support, with your kind blood donation...

[Mitchman]

From everything I can see, Sandy did OK.

[Rick64]

The provision, sought by Berkshire and pushed by Nebraska Sen. Ben Nelson in the Senate Agriculture Committee, would largely exempt existing derivatives contracts from the proposed rules. Previously, the legislation could have allowed regulators to require that companies such as Nebraska-based Berkshire put aside large sums to cover potential losses. The change thus would aid Berkshire, which has a $63 billion derivatives portfolio, according to Barclays Capital.

Warren's political contributions at work.

[Turd Ferguson]

I wish it wasn't public, too. That way, when these snakes and crooks are finally put out of business, the only people losing their life savings would be the perpetrators. As a public company, every investor in the common will go down in flames with them.

Despicable.

[BlackBeard]

+100

[Inspector Asset]

Looks like Warren might of made he 1st bad call, since, about 2o years ago, maybe with KKR?

Better stick too the razors and cola and insurance rackeets.

Maybe get in on the medical weed buz. Got any farmland in Omaha? I'll go in as partner and over see the plantation.

Maybe we can get the Goldman crooks to work off their retribution by working on the farm?

Lets talk.

[anony]

+1000

[potatomafia]

Fabrice Tourre also wishes it wasnt public.

http://www.marketwatch.com/story/tourre-emails-show-agony-ecstasy-of-banker-life-2010-04-26

[jkruffin]

Wait till we see Shittybank's plan after the FED dumps all their shares for fake profits.  I guarantee they do a massive reverse split once the FED is out.  Then it will be shorted back down below $5 again.  LOL   People buying C stock are idiots.

[anony]

heh-heh  shittybank...classich

[knukles]

Don't make fun of The Pink Dinosaour's handicap.

[buzzsaw99]

So when the devil wants to dance with you, you better say never
Because the dance with the devil might last you forever

[BorisTheBlade]

SEC must be very responsive to Goldman's wishes if they choose to deliver them to the public.

[jkruffin]

Government selling Shittybank shares????  Exactly who are they selling them to for 8 billion shares worth?  Who in their right mind is buying them? LOL

[Cursive]

Dick Bove told me and the world (on CNBS) that Shitty is going to $16.  What?  You don't believe him?  Buy, buy, buy!

[Duuude]

The Notorious Market-Rigging Ringleader, Goldman Sachs

Tyler Durden, writing on Zero Hedge, notes that the HFT game is dominated by Goldman Sachs, which he calls “a hedge fund in all but FDIC backing.” Goldman was an investment bank until the fall of 2008, when it became a commercial bank overnight in order to capitalize on federal bailout benefits, including virtually interest-free money from the Fed that it can use to speculate on the opaque ATS exchanges where markets are manipulated and controlled.

Unlike the NYSE, which is open only from 10 am to 4 pm EST daily, ATSs trade around the clock; and they are particularly busy when the NYSE is closed, when stocks are thinly traded and easily manipulated. Tyler Durden writes:

“[A]s the market keeps going up day in and day out, regardless of the deteriorating economic conditions, it is just these HFT’s that determine the overall market direction, usually without fundamental or technical reason. And based on a few lines of code, retail investors get suckered into a rising market that has nothing to do with green shoots or some Chinese firms buying a few hundred extra Intel servers: HFTs are merely perpetuating the same ponzi market mythology last seen in the Madoff case, but on a massively larger scale.”

HFT rigging helps explain how Goldman Sachs earned at least $100 million per day from its trading division, day after day, on 116 out of 194 trading days through the end of September 2009. It’s like taking candy from a baby, when you can see the other players’ cards.

http://www.webofdebt.com/articles/computerized_front_running.php

[Buck Johnson]

Very good, and so true.  The reason why lawsuits didn't jump out so fast 2 years ago was that the people who may have wanted to sue was thinking that they may get a better deal or a bailout from the govt. since they where bailing out almost everybody.  But since that isn't coming and the SEC finally is going after Goldman, the lawsuits are coming out of the woodworks and it's going to be nasty. 

[asteroids]

Will any of them take the 5th?

[markar]

does an insurance co need to pay claims where fraud was committed?