NEW YORK–(BUSINESS WIRE)–The Goldman Sachs Group, Inc. (NYSE: GS – News) responds to a complaint filed by the SEC today.
The SEC’s charges are completely unfounded in law and fact and we will vigorously contest them and defend the firm and its reputation.
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- Use the Bloomberg command
NH BLG_DEALBREAKER <GO>
to access Dealbreaker
Double up or sell sell sell???????????????? The questions that make the trading world go round……..
Bite it you scumfuks. We did nothing wrong.
http://www.youtube.com/watch?v=FGKSmKog-pA
Goldman Sachs should sideline Lucas for a bit and get this guy. He’s good when one’s employer is under siege.
http://www.youtube.com/watch?v=s27Oq5ot0ZI
Really CNBC? Just the Deca-Box? This clearly calls for, at a minimum, the Octa-Box…
Goldman Sachs = “The Matrix”
“This is your last chance. After this, there is no turning back. You take the blue pill – the story ends, you wake up in your bed and believe whatever you want to believe. You take the red pill – you stay in Wonderland and I show you how deep the rabbit-hole goes.”
Morpheus – The Matrix 1999
LvP can sugar coat kitty slaughter, he’ll just plow through these issues like a carving knife through butter stored at room temperature.
Defend their reputation? you mean the reputation of being front running, lying, thieving cunts? I dont think it needs defending…somehow I thinks that rep is here to stay.
Why should the SEC be expected to win this case when they botched the Bear case? Seems like a slam dunk win for GS to me.
obama needs a scapegoat if he wants the democratic candidates to win in the fall elections. i don’t think there is another financial firm more hated by the electorate aka “folks” than GS. brilliant move.
Finally!
SEC has no choice but to win this one. Especially after the Madoff fuck up.
#8 speaks the sad truth. This seems even flimsier than that.
Bess: After the proper amount of time to digest the Zachery Kouwe hiring, I belive you have made the wisest of decisions – his history of cutting and pasting has prepared him perfectly for this job.
Yes GS fund raises for the DEMS then they come back and indict the firm. I love it!
FUCK YOU GS!
Wait until Cuomo sees how well this goes over. He will bring his own charges.
Read the brief, case completely absolves Abacus investors of any responsibility (fiduciary or other), my guess is Tourre gets thrown under the bus, GS pays a fine (what’s 7 or low 8 figures?) and “neither admits nor denies wrongdoing,” at most.
i’m short the Euro, long Oil, and long commercial real estate. Thoughts?
I should add (but should be obvious) that Tourre is prolly gonna try to shift the blame to the higher-ups; that may be the only interesting part of this case, if any.
@Anal –
I think the twist of hiding Paulson’t involvement could be interesting. I do note that the complaint specifically fails to allege that Paulson did NOT buy the equity. If he did buy it, I suspect the claim that he had interests adverse to the CDO goes away, and therefore if interests are aligned it is hard to say his “involvement” in picking the portfolio needed to be disclosed.
13 Misses Greg.
Anybody can be a genious like Paulson if your are rigging the system. Fastow part II.
anyone who thinks this is not a big deal is wrong, dead wrong.
@3 FTW
This story shows them acting in the best interest of one client. That’s an uptick.
Coup at goldman
cunty cunt cunt cunt
@11 – we just know better.
26 here: @11 should have been @21. Going to apply at AIG in a bit here…
Paulson buys the equity in the CDO, + CDS protection x factor
OB must then sell the BBB+, AA, AAA etc. Since the equity (the crap) is gone, should be easy no?
Since the equity is the hardest to sell to investors (no one wants it) – this was a HUGE BOOM FOR ISSUERS.
It became
SELL SELL SELL SELL SELL AS MUCH AS WE CAN.
then paulson is funded by the 20%+ div on the equity, buys more CDS. Only risk is market gap between default process and equity = 0 at first signs of trouble.
Win-win for paulson.
Win-win for GS.
`
“Who can lose?”
@7 = Matt Taibbi
Bess,
I wrote you on facebook. I have completed my wedding sack (a la Borat) now all I need for you to do is jump in. Consent not necessarily required.
@29 – Really? Where????
I wonder which law firm papered this deal and what it knew about Paulson’s role. would not want to be in their shoes.
And Paulson was thought to be such a genius.Why, he was everywhere! Now we know.
Uh… everything that guy just said is bullshit… Thank you.
See the New Yorker Jan. 18th 2010 issue page 27.
long commercial real estate? good work. use some leverage while you’re at it.
Tyler Durden has a raging clue right now.
poll for the commentariat:
who would you most prefer to kick the living snot out of
a) matt taibbi
b) shia labeouf
c) tim geithner
having trouble deciding. thank you.
-guy who hates arrogant little pricks
@15 Anal_yst, thanks for another illuminating contribution. Fiduciary responsibility is difficult to exercise in the face of fraud. If you did read the brief you’ll see that ACA asked Fourre what Paulson’s role was. Fourre obfuscated/lied about the equity investment and most definitely omitted to mention that Paulson was going to be buying the protection ACA Capital was selling. That’s why his ass is on the line now.
If you ask an underwriter, registered with FINRA a question re. an offering and get lied to and act on that information, who the fuck do you think is at fault and what would you do to resolve it? Did you even take the Series 7/63?
…and I just gave birth to a raging, post lunch Kouwe
@38 A preferably in a WWF-style match where I could use his body to bludgeon B
Has anyone heard from that noted junk food king in Nebraska? Didn’t his lawyer say that he invested in GS because he believed in their integrity?
Fourre falls on his sword to save the firm from further scrutiny, because God knows they don’t want anyone to know what they’re REALLY up to.
GS unofficial response:
http://www.joyengine.com/film/all-you-haters-suck-my-balls/
@39 –
Can you point to the part in the complaint where it alleges that Paulson did NOT, in fact, buy the equity?
@4 = AIG quant
@39
Tourre said “between 0 – 9 %” if ACA accepted that then its their dumbass faults for not clarifying. I don’t see anywhere in the brief that ACA refused to do the deal without further clarification, so, while you may claim Tourre obfuscated (I don’t necessarily disagree), its ACA’s poor diligence at fault. If, on the other hand, Tourre outright lied, that’s a different story altogether. As an above comment mentioned, I also don’t see anything in the brief that says Paulson DIDN’T take an equity stake, though, so unless you know something I don’t, I stick with my original thesis.
I hate doing this, but:
@46 ftw
Lock my CEO up, and I’m the CEO, fuck.
@45 –
Page 13 of the complaint is all about that assertion.
Signed
NOT @39
@47 Anal_yst – do you even know what the heck 0-9% in that context meant? It didn’t mean “between 0-9%” it meant the equity tranche which “attaches” (in CDO speak) at 0% and “detaches” at 9%.
Did you even read the part where they said “In fact, GS&Co never intended to market to anyone a “[0]% – [9]%” first loss equity tranche in this transaction.”? i.e. there WAS NO EQUITY INVESTOR.
All they did was sell protection on a list of RMBS bonds to Paulson&Co, and buy protection from ACA with ABN Amro (as a convenient patsy, since they probably had a good idea of ACA’s ability to pay).
Secondly from the filing:
***************************************************************
48. On January 12, 2007, Tourre spoke by telephone with ACA about the proposed transaction. Following that conversation, on January 14, 2007, ACA sent an email to the GS&Co sales representative raising questions about the proposed transaction and referring to
Paulson’s equity interest. The email, which had the subject line “Call with Fabrice [Tourre] on Friday,” read in pertinent part:
“I certainly hope I didn’t come across too antagonistic on the call with Fabrice [Tourre] last week but the structure looks difficult from a debt investor perspective. I can understand Paulson’s equity perspective but for us to put our name on something, we have to be sure it enhances our reputation.
***************************************************************
Why do you think they might have had that impression after the call? And why did Fourre do nothing to correct it?
@50 Your statement “all about that assertion” is exactly my point – read that section carefully. It specifically does NOT say that he didn’t buy it. I would say it rather carefully dances around saying it and strongly implies it, but it does not state it. It could even be read to imply Paulson had a NET short position.
-45
@51,
Why are you trying to debate with Anal_yst? That he somehow managed to absolve Goldman of any responsibility or wrongdoing was/is
completely predictable. Don’t waste your breath.
But the real question is – what about the children?
@45/52:
Agree with you. The SEC does NOT explicitly state that Paulson did NOT buy the equity stake, but the whole crux of its case rests on that assertion. These things are always worded very poorly, and one has to assume that they can definitively prove that JP was only on the short side of the trade.
@50
@51 – at the equity level, attachment and detachment points are the same thing as % of the CDO, no?
Also, please read carefully. All it would have taken was a specific allegation that “Paulson did not, in fact, buy any equity.” The SEC tries very hard to imply in this document that he didn’t buy it, but they go out of their way to NOT allege it.
The fact that GS didn’t “MARKET it to anyone” does not mean they didn’t sell it to Paulson or to someone else. I would be stunned if GS kept the piece. I’ll bet a lot of money against that.
My point is this, after reading through the SEC complaint, is it a slam dunk case? You are reading one side, does this SEC have an ace up their sleeve or is this it? When both sides come out, I can guarantee the picture is not clear cut (though I think frenchie is the big loser in all this).
At what point did GS short itself today?
@52, @55,
Most CDO equity is registered either at DTCC or Irish Stock Exchange or some other exchange/registrar.
The informant in the case was someone at Paulson (Pellegrini). I’m sure he’d know if they bought equity and would have no incentive to lie about something that’s easily verified.
-51 and 39
@53 – you’re right. Thanks for the reminder. I’m done debating with that moron.
My Goldman sources tell me that LB has been pacing his office all day, calling the SEC the n-word, and demanding that Israel have the Dubai hit team be readied for their next assignment
I am DAZZLED
@51/39/50
Enlighten me, then, if the SEC (via Pelligrini) knew that Paulson DIDN’T buy any equity why the hell didn’t they explicitly SAY so? Why dance around it?
What must one do to merit criminal fraud charges? To TGFD, these civil charges seem like lightweight bullshit.
The Guy from Delaware
CNBC Flash:
IG Report: SEC Was Aware in ’97 Stanford Likely Running Ponzi Scheme; SEC Missed Many Chances to Probe Stanford (story developing)
on the tape:
***** GOLDMAN’S BLANKENFEIN THREATENS TO VOMIT ON SEC *****
Its all about the game ….
and how you play it!
Its all about control…
and how you take it!
I am the Game!
You can’t play me!
I am control!
You can’t make me!
THE.GREATEST.TRADE.EVER. WALL STREET SCUM
@51: ACA’s reputation, I almost fell off laughing…
Anal_yst@62,
Refer to the last sentence in @59.
@51/39/50
@69
Well I was suspect that you’d never taken even an intro bizlaw class, now it seems fairly clear you’ve never studied nor practiced debate, either.
Apparently, GS also pulled the wool over the ACA Operating committee when they agreed to be named as the Selection Agent on the offering doc… oh wait, those guys have no money to shake down… let’s move on.
The SEC will have to show all the deals that Paulson got ACA to select… you know, the ones that hadn’t gone through their meticulous credit review process?? That’s a significant percentage right?? Half? 25%? 10%?
Taking the downside risk on $909mm of thin sliced risk when fundamentals are detoriorating? And all for 50bps running…
From Dow Jones NewsWires…
Two Goldman CLOs (Collateralized Loan Obligations…catchy, isn’t it) that were “in the works” today for a planned Monday release, are apparently “hitting the skids” and their future is now uncertain.
Like CDOs, “CLOs work as a way for investors to take lower-rated debt off their own balance sheets and place it in a top-rated investment vehicle.”
According to Goldman, “CLOs are different from CDOs because CLOs are made from corporate loans, not fron (shitty) subprime mortgages.”
“They’re much better” claimed the Goldman source. “Tailored for the pension-fund market.” The source wouldn’t elaborate further because of recent CDO fraud charges against Goldman.
——————————————————-
In today’s environment, TGFD wonders how lower-rated debt can still somehow manage to become a top-rated investment vehicle.
The Guy from Delaware
Would all you psueudo wannabe lawyers wasting our time on your debate please head over to Clusterstock.com or abovethelaw.com
Thanks for your support
@13 – Give the guy a break. First learn how to spell before you assume the mantle of expert editorialist.
[The fact that GS didn’t “MARKET it to anyone” does not mean they didn’t sell it to Paulson or to someone else. I would be stunned if GS kept the piece. I’ll bet a lot of money against that.]
there was no “piece”. This was a *synthetic* CDO, not a real one. The structure is clearly set out in the pitch book. It’s structured as a credit linked note. The only notes sold to investors were the four tranches between first-loss and super-senior – a total of $700m.
@61 – nothing a gin & tonic can’t fix… Well, I am dazzled and confused. Leaving work early to examine mes motifs – might hafta incorporate elsewhere now and ‘severe ties’.
was that wrong?
As usual Anal_yst is dumb as hell and clearly never been near a securities registration exam. Paulson’s involvement in picking the securities was very important information. No one would have bought the securities it if the nature of his involvement were known. Goldman actively hid his involvement in marketing and registering the securities. Therefore the offering documents were misleading and in a material way. That breaks the law, end of story, nothing else here matters ultimately and no boilerplate disclaimers change that things one bit.
LvP’s press conference (Emmit Fitz Hume, Spies Like Us):
http://www.youtube.com/watch?v=iLsDvGlIDh0
“Are there any pension fund managers who bought Abacus here? No?”
I see the IBD minions are furiously debating points of law and once again failing to see the forest.
For starters, the complaint has significant merit. Would it win a conviction? We don’t know. But that’s not what is important. We know that there will be dozens of follow-up lawsuits and much lost business. GS will hurt big time.
Additionally, and more importantly, this action was almost certainly discussed at senior government levels. This represents a concerted action to sacrifice GS. The political situation is demanding this action. Otherwise, there are guys in the Midwest threatening to come east with their guns. (Yes, the situation is that extreme – there are no 2009 bonuses going out in Detroit)
That is what politics looks like in economic crises. Here you are discussing finer points of law because ibanks are accoustomed to navigate the razor edge of legality… well, in crisis situations the law get set aside by the government itself. If it has been deemed necessary to sacrifice GS, then one way or another the government will take them down.
Lesson 1: Politics always trumps money.