Penny-Ante Fine for Goldman Sachs

Goldman Sachs Group agreed to pay $550 million in federal fines and damages after misleading investors. That’s what Goldman earns in two weeks, points out the Washington Post‘s  Matt Miller.

Goldman admitted only that its marketing information about the Abacus deal could have been a bit clearer (or weasel words to that effect). The Wall Street firm’s stock price rose after the announcement, adding more than $3 billion to Goldman’s market value, so the payout essentially made the firm $2.5 billion in one day.

There. That should teach them.

Monstrous News From Wall Street

Goldman Sachs claims it didn’t know the housing market would collapse. That’s their story and they’re sticking to it.

There are indications it was otherwise. A 2007 email by Goldman’s Fabrice Tourre says the index used in trading subprime mortgage derivatives is “like Frankenstein” turning against its creators.  Email from other execs outlines strategies for Goldman to make money betting against its own failing securities.

The firm released its own raft of emails as evidence of corporate ignorance and indecision. That should inspire confidence on The Street.

More:

“Goldman executives cheered housing market’s decline, newly released e-mails show,” Zachary A. Goldfarb, Washington Post.

 

Image by Mike Licht. Download a copy here. Creative Commons license; credit Mike Licht, NotionsCapital.com

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SEC: Goldman Cheated

The Securities and Exchange Commission (SEC) charged Goldman Sachs with defrauding investors with a collateralized debt obligation (CDO) based on subprime mortgages. Goldman failed to disclose that it structured these unregulated instruments in partnership with a hedge fund that was also shorting these securities — betting against them. The CDOs failed to the tune of $1 billion, and investors and bond insurer MBIA were stuck holding the bag. Goldman made $15 million on the deal; the hedge fund made $1 billion when the CDOs went bad.