[/caption]The top company on Wall Street, Goldman Sachs, is rejoicing today for being out of the cross-hairs of the SEC.
Many were predicting that the Security Exchange Commission (SEC) lawyers would have been tougher on Goldman Sachs, who, according to Bloomberg Business Week, had engaged in 2007 a scheme, whereby its' investors were not made privy to all the data pertaining to and germane to a mortgage investment endeavor.
The gist of the wrong doing focused on the defrauding of investors, and failure to tell its investors that the hedge fund Paulson and Co., who engineered the investment for Goldman’s customers, invested against that same endeavor.
In essence, Goldman Sachs made money either way, by essentially betting against itself. Goldman Sachs, on its' part, only acknowledged that its marketing material on the deal was incomplete.
It is ironic that the settlement came less than two hours after the Senate passed legislation to reform the financial system, enacted to avert future crises like the one Goldman was accused of?
There are those who think that Goldman got off easy, and that the $550 million settlement it paid was a slap on its platinum cufflink wrist. Many also thought that Goldman’s liability would run into the billions, in light of the fact that it was a scheme, like the one Goldman was involved with, which caused the market crash and ongoing turmoil on Wall Street.
Kudos to Goldman’s lawyers, who walked away with a very good deal and lenient monetary liability. This is the heart of the good deal worked out between the SEC lawyers and Goldman Sachs: no change in management, no more litigation pertaining to other mortgage linked securities, less than a billion in fines ($550 Million), and the cloud the was hanging over the stock disappearing - ergo the $3 billion in market cap gains yesterday.
No doubt that Goldman will be ratcheting up the effort, by way of public relations, to repair the company’s image, which until this litigation, enjoyed the best of reputation on Wall Street and around the world. I would be remiss if I did not mention the fact that many of the personnel in President Obama’s administration came from the ranks of Goldman Sachs. http://www.businessweek.com/news/2010-07-16/goldman-sachs-victory-ushers-change-for-wall-street.html
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