On the surface, and without knowing the full details of the allegations or evidence, I'd say it sounds like a witch hunt to me.
First... it's civil charges not criminal. That means that the SEC doesn't have evidence enough to prove actual fraud.
Second... as I understand the allegation, the SEC is upset because Goldman did not disclose the method it used for selecting the securities used to collateralize a specific CDO, even though the disclosure of it's selection method was never required under the law. But their logic is that since it all went bad soon after that... there must have been some wrong doing somewhere. I hope that sort of retro-active justice isn't the way our legal system works, but these days who can say.
Third... this story has all the salient catch phrases for enraging people in Washington, or who don't have any inkling of how markets work. They are in the best order I can manage Goldman Sachs, Hedge Fund, CDO, and Short Selling. "If it has that many things involved it must be really bad, and someone needs to go to jail for it" says the logic in all the fashionable liberal salons.
I admit I don't know the whole story so I may be way off, but so far this sounds like the precisely the kind of Anti-Capitalist event that you get when you have a far left administration in DC calling the shots. As near as I can tell none of it was illegal, and all of it was dependent upon things that happened later so no one knew them at the time...but the SEC doesn't care. That is to say... if the credit market hadn't collapsed it would have never been heard of. But since it did, the Democrats running our government need a scapegoat and that scapegoat is Wall Street's most convenient company, Goldman Sachs.
%%%%%%%%UPDATE%%%%%%%%
After having read some of the email the accused VP has written I'd just like to say that being an arrogant egotistical jerk isn't against the law. Maybe it should be, but it isn't today.
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Call me crazy, cause I just might be, but it seems like just the right media-exposure/excuse that DC wants and needs around primary time and in an election year so that they can remind the snooze reading public that banks are all bad and more gov't is good, so we must regulate the banks and the Ds can take this on while the Rs insist there is no problem.
I just wish the powers that be were more honest with the intentions here. The whole story should get interesting.
The thing that bothers me the most is the way the media talking heads already have them convicted and walking the plank. I don't have any stake in Goldman. I was a client of theirs when I was at Caxton but because of the way my execution is done now I don't use them anymore. I know a few people there, but no one who works in credit. I've got no reason to defend them other than the fact that I really do think they're getting a raw deal.
Agreed. More smoke and mirrors by Obama and his ilk to distract from the real economic issues of our times. Saul Alinsky would be so proud.
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