Will The SEC Charges Dent Goldman Sachs Reputation?
On Friday, SEC filed suit against Goldman Sachs (GS) for its failure of full disclosure over the Invest Bank’s marketing of a subprime mortgage product.
The syndicated talk show host Bob Brinker strongly condemned GS on his April 17 show saying that it is absurd to think that Goldman would not disclose to its investors that Paulson & Co. had created a derivatives product by choosing the securities that went into the pool, and then had placed a bet that it would go bust.
Gordon Brown told BBC television on Sunday that he wanted Financial Services Authority (FSA) to conduct a special investigation of Goldman Sachs and the companies there with other banks to find out what actually happened. Brown also accused the beleaguered Investment Bank of “moral bankruptcy” commenting on its plan to pay big bonuses to its top executives.
German Government spokesperson Ulrich Wilhelm told a local newspaper that its regulator will request SEC for information, and will evaluate the documents to decide about legal steps.
AP Business writer Stevenson Jacobs wrote, “Damage from the case could hit other big banks as well.” He also maintained, “The SEC charges are expected to help the Obama administration as it seeks to more tightly police lucrative investment banking activities.”
However, Janet Tavakoli, president of a Chicago consulting firm, Tavakoli Structured Finance, said that Goldman may survive without any significant damages, and there is strong possibility that Janet might prove right in the end notwithstanding SEC chair Mary Schapiro’s apparent new found will to take GS into task.
In an article called High-tech Highway Robbery, Mike Whitney wrote about how the SEC had turned blind eye on High-Frequency Trading (HFT) that manipulates the market and rip off investors tens of billions of dollars every year.Continued on the next page