Goldman shares drop over alleged fraud
The SEC claims that Goldman created and sold to its clients a mortgage unit that was devised to fail ,without telling clients that the set up was for the portfolio to fail. Within half an hour after this announcement, Goldman’s share price dropped 10% (or over $ 10 billion).
The SEC alleges that one of the world’s largest hedge funds, Paulson & Co., paid Goldman Sachs to structure a transaction in which Paulson & Co. could take short positions against mortgage securities chosen by Paulson & Co. based on a belief that the securities would experience credit events. At the heart of the fraud claim is the allegation that Goldman sold the mortgage securities to other investors commenting that the portfolio was selected by an independent third party specialized in credit risk, while in fact Paulson & Co had a big influence on the selection. Goldman allegedly did not disclose that side of the deal to its clients, who would possible have made a different decision if they would have that information. ‘Regular’ investors, including giant like AIG, lost billions on the portfolio. Paulson & Co filled its pockets to the max; it is a zero sum game after all (not taking Goldman’s fees into account).
The SEC allegations are part of a civil suit, not a criminal one. It is one of the first cases against behavior in US financial institutions that caused the housing/financial crisis. More to follow…
http://www.nytimes.com/2010/04/17/business/17goldman.html?hp
http://www.sec.gov/news/press/2010/2010-59.htm
http://www.nytimes.com/2009/12/24/business/24trading.html?_r=1&src=me&ref=business
http://www.nytimes.com/2010/04/17/business/17nocera.html?hp
Dear Sir or Madam
I am looking for financial crime statistics of any kind, by state, between 1978 and 2008. Do you wharehouse such statistics or know where I can obtain them? I am a professor at Florida Gulf Coast University and am looking for this data for research purposes.
Thank you,
Dan