Posts Tagged ‘civil fraud’

Is it OK to cheat as long as it’s not illegal? Does Goldman Sachs say yes?

April 20, 2010

After the Securities and Exchange Commission last Friday charged America’s most respected financial firm, Goldman Sachs, with defrauding investors, CNN’s Rick Sanchez asked, “Is it OK to cheat as long as it’s not illegal?

Goldman says no: CEO Lloyd Blankfein left a voicemail on every Goldman worker’s phone saying,

“Goldman Sachs has never condoned and would never condone inappropriate activity by any of our people. On the contrary, we would be the first to condemn it and take immediate and appropriate action.”

We’ll see. According to the SEC complaint, Goldman Sachs was approached by hedge fund operator John Paulson (no relation to ex-Treasury secretary and ex-Goldman CEO Henry Paulson), who wanted to bet against sub-prime mortgages—that is, he wanted to bet that their value would fall as their riskiness became clear and as borrowers defaulted.

Working with G-S vice president Fabrice Tourre (“Fabulous Fab,” as he called himself), Paulson hand-picked a billion dollar portfolio of mortgage-backed securities that he considered the absolute riskiest and most likely to fail. (more…)