Goldman Sachs scandal: Fox Guarding The Hen House

Goldman Sachs scandal


Goldman Sachs scandal:  The Big Bad Wolf?

Updated Feb 2023

Are you tired of so-called experts losing your hard-earned money while charging you a hefty fee? You’re not alone. The latest data shows investors withdrawing a whopping $20.7 billion from hedge funds in June alone, making it one of the most significant outflows from the market since 2009.

This could be the beginning of a new trend where investors are taking matters into their own hands, refusing to pay for ineffective advice. Not only are these experts losing money in the markets, but the crowd is also negative on this market, failing to understand how it continues to trend higher against a backdrop of uncertainty. But perhaps this very anxiety is fueling the stock market bull that so many have overlooked. Want to learn more about this fascinating phenomenon? Click the link below to access the full article. Investor Anxiety; Rocket Fuel for Unloved Stock Market Bul

The Fed & Goldman Sachs scandal

The Federal Reserve has taken decisive action against Goldman Sachs and one of its former executives in a move that has escalated an ongoing investigation into a leak of confidential government information. This historic action was initiated after a junior Goldman Sachs banker accessed classified information from the Federal Reserve Bank of New York in 2014 through a New York Fed employee.

Both men have admitted to stealing government property, resulting in Goldman Sachs paying a whopping $50 million penalty to New York State regulators due to “management failing to supervise” the employee effectively. Although the Fed did not act against Goldman Sachs at the time, its decision to pursue them now is highly unusual.

The move cites Goldman Sachs for “unauthorized use and disclosure of confidential supervisory information”, placing the Federal Reserve Bank of New York and its employee in an awkward position. Despite the leak originating at the New York Fed, Goldman Sachs, not the Federal Reserve, uncovered the illegal activity. nytimes

Goldman Charged with $1bn fraud

Goldman Sachs, the Wall Street bank, which was once considered a shrewd winner from the financial crisis, has been slapped with potentially devastating fraud charges today. US regulators have accused the firm of fiddling investors out of over $1bn (£640m) by wilfully marketing toxic sub-prime mortgage-related securities. The lawsuit, a 22-page document, has been filed by the US securities and exchange commission (SEC). It charges Goldman Sachs with working alongside a controversial US hedge fund, Paulson & Co, to structure and sell clients a complex package of mortgages. At the same time, Paulson took a “short” position betting that the same mortgages would fail.

Within minutes of the charges emerging, Goldman’s shares plummeted by 13% as investors feared a shattering blow to the investment bank’s credibility. The SEC’s accusations are levelled against the firm as a whole and against a French employee, Fabrice Tourre, 31, who is now an executive director in Goldman’s London office.  The Guardian

Investment banking behemoth Goldman Sachs (GS, -0.57%) has acquiesced to a list of “facts” and agreed to pay $5.1 billion to settle a lawsuit related to its management of mortgage-backed securities leading up to the 2007 financial crisis, as declared by the U.S. Department of Justice on Monday. While it is a notable improvement on previous DoJ settlements when Wall Street companies were permitted to say they “neither admit nor deny the charges,” it is improbable to pacify those who say the government hasn’t done enough to punish bankers in the aftermath of the financial crisis. Similar to previous settlements, no individual bankers have been indicted with wrongdoing.

Between 2005 and 2007, Goldman issued and underwrote many mortgages and securities secured by residential loans borrowed by customers with substandard credit ratings. This aided in tipping the economy into a recession after the housing bubble burst in 2007, leading to a deluge of foreclosures and delinquencies. This resulted in billions of dollars in losses for investors. The settlement cited mortgage loans that Countrywide, Fremont, and others originated. Bank of America purchased Countrywide in early 2008. Fremont is no longer operating.

Goldman agreed to pay $2.39 billion in civil penalties and another $1.8 billion in relief through loan forgiveness and financing for affordable housing. Additionally, $875 million will be disbursed in cash to resolve claims from other federal and state entities.

Acting Associate Attorney General Stuart F. Delery stated, “This resolution holds Goldman Sachs accountable for its serious misconduct in falsely assuring investors that securities it sold were backed by sound mortgages when it knew that they were full of mortgages that were likely to fail.”    Full Story

Goldman’s Rap Sheet

Goldman Sachs: Despite past setbacks, the investment banking titan thrives amidst adversity

In the early 2000s, Goldman Sachs faced its fair share of obstacles, with accusations of ethical misconduct thrown it’s way. However, despite these challenges, the firm’s tenacity and resilience have allowed it to overcome these hurdles and come out on top.

2002: Goldman fined for failing to preserve e-mail communications

In 2002, Goldman was slapped with a paltry $1.65 million fine by the industry regulatory body NASD (now FINRA) for purportedly failing to preserve e-mail communications. While this may have seemed like a damning blow, Goldman refused to let this setback define its future.

2003: Goldman pays a share of the global settlement for alleged conflicts of interest

The following year, Goldman paid $110 million as its share of a global settlement by ten firms with federal, state, and industry regulators concerning alleged conflicts of interest between their research and investment banking activities. However, this was merely a bump in the road for Goldman, which continued to push forward with its unwavering determination.

2004: Goldman fined for rule violations relating to high-yield corporate bonds

In 2004, Goldman was one of four firms fined $5 million by NASD for rule violations relating to trading in high-yield corporate bonds, with the firm also making restitution payments of around $344,000. But despite these penalties, Goldman refused to let these challenges defeat it.

2005: Goldman pays a civil penalty for alleged rule violations relating to the allocation of stock

In 2005, the SEC it was announced that Goldman would pay a civil penalty of $40 million to resolve allegations that it violated rules relating to allocating stock to institutional customers in initial public offerings. Additionally, Goldman paid a $125,000 fine to NASD for violating laws relating to the sale of restricted securities during initial public offerings. While some may have seen these fines as a cause for concern, Goldman Sachs stood firm in its commitment to success.

2006: Goldman fined in connection with SEC charges relating to auction-rate securities

In 2006, Goldman was one of 15 financial services companies fined a total of $13 million in connection with SEC charges that they violated rules relating to auction-rate securities. While this could have been a significant setback for many firms, Goldman refused to let these challenges define its future.

Despite these challenges and setbacks, Goldman Sachs has emerged as a powerhouse in the investment banking industry, demonstrating an unwavering commitment to success and an unbreakable spirit in the face of adversity.  Full Story

Other Articles of Interest:

Investor Anxiety; Rocket Fuel for Unloved Stock Market Bull (Aug 6)

Most Unloved Stock Market Bull Destined To Roar Higher (Aug 5)

Student Debt Crisis Overblown & Due to Stupidity  (Aug 4)

Despite Investor Angst Most hated stock market keeps trending higher (July 30)

False Information, Mass Psychology & this Hated Stock Market Bull (July 29)

Zero Percent Mortgage Debuts setting next stage for Stock Market Bull  (July 27)

Long Term, Stock Market Bears, Always Lose  (July 27)

Information overkill & trading markets utilising Mass Psychology  (July 27)

Simple Common Sense Fix Ends Student Debt Problem (July 27)