Posts Tagged ‘Fee

20
Jul
10

Goldman Sachs’s Fabrice Tourre Disputes SEC’s Fraud Allegations in Filing

NEWS
Goldman Sachs’s Fabrice Tourre Disputes SEC’s Fraud Allegations in Filing

Tuesday, July 20, 2010

Fabrice Tourre, the Goldman Sachs Group Inc. executive and co-defendant in the U.S. Securities and Exchange Commission’s charges that the bank defrauded investors, on Monday asked the court to dismiss the case filed against him by the U.S. Regulators.

Tourre, whose emails about a collateralized debt obligation were at the heart of the Securities and Exchange Commission or SEC’s complaint, denied that he made any materially misleading statements or omissions, or behaved wrongly in connection to complex mortgage-linked securities called collateralized debt obligations or CDO.

In a filing with the U.S. District Court in the Southern District of New York Tourre “specifically denies he made any materially misleading statements or omissions or otherwise engaged in any actionable or wrongful conduct” stemming from the CDO known as Abacus.
Tourre also argued that neither he nor his employer had a “duty to disclose any allegedly omitted information” in the marketing and sale of the CDO.

In April, the Securities and Exchange Commission accused the investment bank that it did not reveal that one of its clients, Paulson & Co, played a significant role in the selection of securities contained in the Abacus mortgage portfolio and which was later sold to investors.

Following the collapse of the housing market, the securities in that mortgage portfolio – Abacus – lost more than $1 billion.
Goldman said it was a “mistake” to state that the loans contained in the CDO had been selected by a third party without mentioning the role of Paulson & Co, a hedge fund that bet against the security.

Last week, in a settlement, Goldman agreed to pay $550 million to settle civil fraud charges brought in by the SEC. This is reportedly the largest ever for a financial institution and is less than the $1 billion fraud that the Commission alleged.

Tourre, who is the only Goldman Sachs executive named as a defendant in the SEC’s fraud lawsuit, has yet to settle with the regulator. Goldman also agreed to co-operate with the SEC in its case against Tourre.

Goldman Sachs declined $0.49 or 0.34 percent and closed Monday’s regular trading at $145.68. After hours, Goldman Sachs declined further $1.68 or 1.15 percent and traded at $144.00
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12
Jun
10

Goldman Sachs Crime watch – SEC Launches 2nd Major Investigation

NEWS
Goldman Sachs Crime watch – SEC Launches 2nd Major Investigation

Saturday, June 12, 2010

US securities regulators are hunting for fresh dirt on Goldman Sachs Group, hoping to bolster their lawsuit against the bank and perhaps force it to settle on terms more to the regulators’ liking.

Two months ago the Securities and Exchange Commission charged Wall Street’s most powerful bank with civil fraud in connection with a subprime mortgage-linked security.

The case hinges on whether Goldman misled investors when it marketed Abacus 2007, a mortgage-linked security that turned toxic during the mortgage crisis.

Now, the SEC is also looking at other collateralized debt obligations that turned toxic, including Hudson Mezzanine Funding, a source familiar with the investigation said on Thursday.

“You put a number of things together and then it becomes harder to defend against all of them,” said Annemarie McAvoy, a Fordham University School of Law professor and a former federal prosecutor

“So you finally cry uncle and say, ‘Fine, I’ll settle.'”

The expanding investigation of Goldman’s CDOs comes as federal prosecutors probe some of the complex mortgage-linked transactions that Wall Street firms cobbled together and which helped spark the worst financial crisis in decades.

Even the Financial Industry Regulatory Authority is getting into the act.

Reuters has learned the securities industry’s self-regulatory agency recently began its own investigation into whether Wall Street banks violated customary sales practices in hawking CDOs to institutional investors.

A document reviewed by Reuters reveals FINRA is looking into potential improprieties in the structuring of the deals and the relationship between the CDO underwriters and mortgage lenders.

Former Goldman customers also are putting pressure on the bank and its chief executive, Lloyd Blankfein.

Reuters previously reported that SEC lawyers had looked at the $1 billion Timberwolf deal before filing the Abacus lawsuit in April.

The SEC’s interest in the $2 billion Hudson CDO was first reported by the Financial Times.

U.S. Senator Carl Levin, during a hearing in April of the Senate’s Permanent Subcommittee on Investigations, raised Abacus, Timberwolf and Hudson while questioning a cast of past and present Goldman employees, including Blankfein.

In a Senate floor speech in May introducing legislation to curb conflicts of interest in Wall Street deals, Levin zeroed in on Hudson Mezzanine 2006-1.

“When Goldman first sold the securities to its clients, more than 70 percent of Hudson Mezzanine had AAA ratings,” he said. “But … within 18 months Hudson was downgraded to junk status, and Goldman cashed in at the expense of its clients.”

The Hudson deal closed in November 2006 and went into liquidation in May 2008.

The myriad investigations, coupled with the Timberwolf litigation, could create a tipping point at which Blankfein and other Goldman executives decide they have no choice but to reach some sort of comprehensive settlement, according to legal experts.

“Will there be more stuff? At this point, it certainly wouldn’t surprise me,” said White.

At the least, the SEC could be looking to bolster its Abacus case, which some saw as weak. SEC commissioners voted to bring the lawsuit in a split decision.

Fordham’s McAvoy said the SEC’s strategy could be to strengthen the initial case by adding new material from other deals.

“A lot of folks don’t think the initial case is as strong as the SEC made it out to be,” McAvoy said.

Goldman shares are down more than 25 percent since the SEC filed its lawsuit on April 16. The shares were off 2.4 percent to $133.49 in Thursday morning trading.
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01
May
10

Goldman Sachs under criminal investigation

NEWS
Goldman Sachs under criminal investigation

Saturday, May 1, 2010

Federal prosecutors have opened a preliminary criminal investigation into alleged fraud at Goldman Sachs, sending shares in the Wall Street bank plunging.

Sources confirmed the U.S. attorney’s office had begun liaising with the Securities and Exchange Commission, which brought civil charges against Goldman two weeks ago, accusing it of misleading investors over a $1 billion derivatives deal.

Prosecutors have not yet determined whether there is evidence to bring criminal charges.

Goldman shares fell more than 9 percent on Friday to close at $145. Before the commission sued the company on April 16, its stock stood at $184.

The commission claims the bank cheated customers in a 2007 deal concerning a mortgage-backed security. Goldman allegedly failed to tell investors that U.S. hedge fund Paulson & Co was going “short” by betting that the security would decline in value. Paulson was allegedly allowed to stuff it with mortgages doomed to default. Royal Bank of Scotland backstopped the deal and was left with an $840 million liability.

The British Financial Services Authority is also investigating.

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28
Apr
10

Goldman’s defense? We’re misunderstood

NEWS
Goldman’s defense? We’re misunderstood

Wednesday, April 28, 2010

Goldman Sachs on Tuesday denied reaping vast profits from the collapse of the U.S. housing market as its top executive and a star trader faced hostile questions in Congress over the 2008 financial meltdown.

In angry exchanges before a Senate investigative committee, the storied Wall Street firm was accused of fuelling a crisis that forced thousands of Americans from their homes and continues to ravage the U.S. economy.

Top Goldman Sachs officials have defended their conduct in the financial crisis, flatly disputing the government’s fraud allegations against the giant financial house. I did not mislead investors, insisted a trading executive at the heart of the government’s case.

But they ran into a wall of bipartisan wrath before a Senate panel investigating Goldman’s role in the financial crisis and the Securities and Exchange Commission fraud suit against it and one of its traders. Sen. Carl Levin (D-Mich.) accused Goldman on Tuesday of making risky financial bets.

About a half dozen protesters were in the committee room, dressed in prison stripes with names on signs around their necks of Fabrice Tourre, the only company official directly accused in the SEC suit, and Goldman CEO Lloyd Blankfein, who was also scheduled to testify.

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27
Apr
10

Goldman Sachs: Lloyd Blankfein Says Firm Doesn’t Need to Disclose Position

NEWS
Goldman Sachs: Lloyd Blankfein Says Firm Doesn’t Need to Disclose Position

Tuesday, April 27, 2010

Goldman Sachs on Tuesday denied reaping vast profits from the collapse of the U.S. housing market as its top executive and a star trader faced hostile questions in Congress over the 2008 financial meltdown.

In angry exchanges before a Senate investigative committee, the storied Wall Street firm was accused of fuelling a crisis that forced thousands of Americans from their homes and continues to ravage the U.S. economy.

Democratic Senator Carl Levin, the panel’s chairman, assailed Goldman as representative of Wall Street’s ‘unbridled greed,’ drawing them into a raging political battle over financial reform.

The Senate was expected to vote later on Tuesday on whether to proceed with debate about the most sweeping financial reforms in a generation, a day after Republicans successfully blocked a similar move.

Against this caustic backdrop executives battled to salvage the firm’s reputation, rejecting charges – recently filed by a U.S. watchdog – that Goldman sold clients a complex financial product devised by some who bet against it.

Levin demanded to know why Goldman had been ‘trying to sell a shitty deal’ to investors, fuming that ‘as we speak, lobbyists fill the halls of Congress hoping to weaken or kill reforms that would end these abuses.’
French trader Fabrice Fabulous Fab Tourre, who is at the centre of the Securities and Exchange Commission’s case against the firm, was among the first to be dragged before the committee.

He denied any wrongdoing: ‘I deny – categorically – the SEC’s allegation. And I will defend myself in court against this false claim,’ said Tourre.

‘I have been the target of unfounded attacks on my character and motives.’

If Goldman executives hoped to get an easier ride from Republicans, they may have been disappointed. Former Republican presidential candidate John McCain was scathing.

‘I don’t know if Goldman Sachs has done anything illegal,’ he said, adding that ‘from the reading of these emails and the information that this committee has uncovered there is no doubt their behaviour was unethical and the American people will render a judgment as well as the courts.’

Goldman chief executive Lloyd Blankfein was due to appear later in the day, but in prepared testimony said there was nothing wrong with Goldman hedging its bets by holding ”short” positions that would benefit the firm if housing prices collapsed.

‘(We) didn’t have a massive short (position) against the housing market and we certainly did not bet against our clients,’ he said.

‘If our clients believe that we don’t deserve their trust, we cannot survive,’ he said. ‘We believe that we managed our risk as our shareholders and our regulators would expect.’

Blankfein also said that, ‘while profitable overall,’ Goldman lost about $1.2 billion from investments tied to the residential housing market.
In the hearing, Levin pointed to Goldman email messages he said refuted the firm’s claims.

In one November 2007 message from Blankfein, he says: ‘Of course we didn’t dodge the mortgage mess. We lost money, then made more than we lost because of shorts,’ which are essentially bets that the market will drop.

Goldman Sachs on Tuesday denied reaping vast profits from the collapse of the U.S. housing market as its top executive and a star trader faced hostile questions in Congress over the 2008 financial meltdown.

In angry exchanges before a Senate investigative committee, the storied Wall Street firm was accused of fuelling a crisis that forced thousands of Americans from their homes and continues to ravage the U.S. economy.

Democratic Senator Carl Levin, the panel’s chairman, assailed Goldman as representative of Wall Street’s ‘unbridled greed,’ drawing them into a raging political battle over financial reform.

The Senate was expected to vote later on Tuesday on whether to proceed with debate about the most sweeping financial reforms in a generation, a day after Republicans successfully blocked a similar move.

Against this caustic backdrop executives battled to salvage the firm’s reputation, rejecting charges – recently filed by a U.S. watchdog – that Goldman sold clients a complex financial product devised by some who bet against it.

Levin demanded to know why Goldman had been ‘trying to sell a shitty deal’ to investors, fuming that ‘as we speak, lobbyists fill the halls of Congress hoping to weaken or kill reforms that would end these abuses.’

French trader Fabrice Fabulous Fab Tourre, who is at the centre of the Securities and Exchange Commission’s case against the firm, was among the first to be dragged before the committee.
He denied any wrongdoing: ‘I deny – categorically – the SEC’s allegation. And I will defend myself in court against this false claim,’ said Tourre.

‘I have been the target of unfounded attacks on my character and motives.’

If Goldman executives hoped to get an easier ride from Republicans, they may have been disappointed. Former Republican presidential candidate John McCain was scathing.

‘I don’t know if Goldman Sachs has done anything illegal,’ he said, adding that ‘from the reading of these emails and the information that this committee has uncovered there is no doubt their behaviour was unethical and the American people will render a judgment as well as the courts.’

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26
Apr
10

Republicans block debate of finance rules reform

NEWS
Republicans block debate of finance rules reform

Monday, April 26, 2010

U.S. lawmakers on Monday failed to pass a test vote of the widely watched financial regulatory reform bill in a sharply divided Senate.

The lawmakers voted 57 – 41, falling short of the 60 votes that Democrats needed to proceed on the regulatory overhaul in the Senate. All 41 Republican senators said that they oppose the bill.

Two Democrats voted against the bill and two Republicans did not vote.

The legislation, which has become President Barack Obama’s top domestic priority after the completion of the healthcare reform, aims to reset the rules of the U.S. financial sector.

The bill, proposed by Senate Banking Committee Chair Chris Dodd (D-Conn.), would map a way to dissolve the so-called “too big to fail” firms in a bid to avoid massive taxpayer-funded “bailouts” introduced in late 2008 amid the financial crisis.

It will also tighten regulations on the giant market in derivatives – complex, privately traded instruments tied to the underlying value of a commodity and seen as vehicles for dangerous speculation.

There has been a consensus that the country must tighten regulations on Wall Street after the collapse of Lehman Brothers in September 2008, which triggered the fresh round of global financial crisis and a deep recession.

But wide disagreements exist between the two parties.

Republicans say the Dodd bill will add new burden to the U.S. taxpayers and may not prevent future crisis.

President Obama said earlier this month that he urged the bill to pass the Senate in weeks. But analysts say that given the escalating political pressure, it will take longer time for the sweeping financial overhaul to complete.

Obama said on Monday he was “deeply disappointed” that Senate Republicans had blocked the test vote.

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26
Apr
10

Goldman Sachs and “War Profiteering”

NEWS
Goldman Sachs and “War Profiteering”

Monday, April 26, 2010

Embattled Wall Street investment giant Goldman Sachs has hit back at claims it used the U.S. sub-prime mortgage crisis to make tens of millions of dollars in profit.

The financial giant, already facing fraud charges, found itself in the middle of a new firestorm on Saturday after emails released by a U.S. Senate panel suggested Goldman executives made huge profits out of the 2007 crisis.

Goldman fired back on Sunday, accusing the Senate Permanent Subcommittee on Investigations of having ‘cherry-picked just four emails from the 20 million pages of documents and emails provided to it’.

‘It is concerning that the subcommittee seems to have reached its conclusion even before holding a hearing,’ added Goldman Sachs spokesman Lucas van Praag.

The emails come at a bad time for Goldmans Sachs.

Earlier this month, the U.S. Securities and Exchange Commission announced it was charging the company with fraud, accusing it of ‘defrauding investors by misstating and omitting key facts’ about a product based on subprime, or higher-risk mortgage-backed securities.

On Saturday, subcommittee chairman Democratic Senator Carl Levin said Goldman Sachs and other investment banks had acted as ‘self-interested promoters of risky and complicated financial schemes that helped trigger the crisis’.

He said the bank had bundled toxic mortgages into complex financial instruments, got credit rating agencies to label them as AAA securities, and then sold them to investors, magnifying and spreading risk throughout the financial system.

In addition, Levin said, the bank often bet against the instruments it sold and rolled in profits as a result.

Van Praag said on Sunday the company had net losses of over $1.2 billion in residential mortgage-related products in 2007 and 2008.

‘This demonstrates conclusively that we did not make a significant amount of money in the mortgage market,’ he said.

But the four emails released by the subcommittee suggest that the company was able to make massive profits by shorting products including residential mortgage-backed securities and collateralised debt obligations (CDOs).

In one email, Goldman Sachs chairman and chief executive officer Lloyd Blankfein appeared to gloat about the strategy in an exchange with other top Goldman executives.

‘Of course we didn’t dodge the mortgage mess. We lost money, then made more than we lost because of shorts,’ the message said.

In another, a Goldman Sachs manager noted that the firm had bet against 32 billion dollars in mortgage-related securities that had been downgraded by credit rating agencies, causing losses for many investors.

‘Sounds like we will make some serious money,’ the manager wrote.

‘Yes, we are well positioned,’ his colleague responded.

In a third email, Goldman employees discussed securities that were underwritten and sold by the company and tied to mortgages issued by Washington Mutual Bank’s subprime lender, Long Beach Mortgage.

One employee reported the ‘wipeout’ of one Long Beach security and the ‘imminent’ collapse of another as ‘bad news’ that would cost the firm $2.5 million.

The ‘good news,’ the employee wrote, was that Goldman had bet against the very securities it had assembled and sold, meaning the failure would net the company five million dollars.

Blankfein and other current and former company personnel are scheduled to testify before the subcommittee on Tuesday.

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