Information Regarding SEC Complaint Against Goldman Sachs

5 Responses

1. Many have been saying for a long time that the financial crisis is not as much an economic problem as a forensic one. Looks to me like things are heating up politically and if Obama is smart he will capitalize on it by unleashing the full force of the DOJ on the rampant crime in finance. I expect the next move to be in the direction of criminal charges.This is long overdue, as William K. Black has documented, and it’s “politically correct” in this environment. Both the left and right have been calling for it. It may be that the Street has finally overreached and is going to get its comeuppance. Yes, it will take some time, and it should stretch through the 2012 general, reminding people of where the problem lies and how it unfolded through so-called free market ideology and state capture that amounted to putting the foxes in charge of the hen house. Articles are now flying around showing how this is just the tip of the iceberg, and this story is sure to get traction with an already irate public.

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2. Tom did you say foxes and henhouses? Nothing ever changes – wake up:

   2004:

   http://www.casinocitytimes.com/news/article/nevada-board-looks-at-misdeeds-on-wall-street-142669?contentID=142669

   he board on Wednesday asked Las Vegas attorney David Arrajj, who represented Goldman Sachs Asset Management, New York, to return next month with a more detailed explanation of what changes have been made at the company since it paid $110 million in a settlement with the SEC.

   1974:
   http://select.nytimes.com/gst/abstract.html?res=F10B15FF385C117088DDAA0894DD405B848BF1D3

   CHARGES OF FRAUD AT PENN CENTRAL ARE FILED BY S.E.C.; Goldman, Sachs in Consent Accord Concerning Sale of Short-Term Debt

   1937:

   http://pqasb.pqarchiver.com/djreprints/access/81289485.html?dids=81289485:81289485&FMT=ABS&FMTS=ABS:AI&type=historic&date=Jun+03%2C+1937&author=&pub=Wall+Street+Journal&desc=Charges+Against+Goldman-Sachs+Denied+Before+SEC&pqatl=google

   The Wall Street Journal, 900 words
   Jun 3, 1937

   WASHINGTON Waddill Catchings, former senior partner of Goldman, Sachs & Co. and author of several books on finance, Wednesday denied specific allegations of David Schenker, conducting the SEC’s investment trust hearing, to the effect that Goldman, Sachs & Co. had formed Goldman Sachs Trading Corp. chiefly for the purpose of increasing the investment banking business of Goldman, Sachs & Co.

   CHANGE you can believe in *snicker*

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3. http://pqasb.pqarchiver.com/djreprints/acc…mp;pqatl=google

   W.E. Sachs Testifies At SEC Trust Hearing
   Questioned on Possible Conflict in Interests of Investment Firm and Trading Unit

   The Wall Street Journal, 297 words
   Jun 16, 1937

   WASHINGTON Walter E. Sachs, senior partner in Goldman, Sachs & Co. and former president of Goldman Sachs Trading Corp., denied Tuesday that the company in its investment banking activities had put its interests before those of the trading corporation.

   http://select.nytimes.com/gst/abstract.htm…4DB405B878FF1D3

   ‘RIGGING’ CHARGED BY SEC IN TRUSTS; Counsel Points to Purchases of Own Stock by Goldman Sachs Trading Corp. DENIAL MADE BY WEINBERG Partner in Banking House Tells of 40-Point and 30-Point Advances in Shares
   E-MAIL

   March 9, 1937, Tuesday

   Page 39, 433 words

   Counsel for the Securities and Exchange Commission contended today that parent companies in the Harrison Williams Utilities empire of 1929 “ran up” their stocks for the purpose of floating new issues

   GOLDMAN SACHS, FIN. & IND. SEC.
   Combination Will Make Largest Investing Unit in Country, $235,000,000 Assets

   The Wall Street Journal, 1101 words
   Feb 15, 1929

   Union of the Goldman Sachs Trading Corp. and the Financial & Industrial Securities Corp. will make the consolidated company not only the largest unit in the country in the line of investing companies but will give it the largest list of stockholders of organizations of that kind. Financial & Industrial Securities has approximately 18,000 shareholders, while the recent Goldman Sachs Trading Corp. has probably 65% to 75% as many.

   GIBSON HITS TRUST UNITS; Banker Testifies at SEC Hearing on Goldman Sachs Trading
   E-MAIL

   June 23, 1937, Wednesday

   Page 39, 105 words

   Harvey Gibson, president of the Manufacturers Trust Company of New York, told the Securities and Exchange Commission today that he disapproved of affiliations between commercial banks and investment trusts

   The Christian Science Monitor (1908-Current file) – Boston, Mass.
   Date: Jun 4, 1937
   Start Page: 11
   Pages: 1
   Section: Business/Finance
   Text Word Count: 279

   Abstract (Document Summary)
   WASHINGTON (AP)–David Schenker, counsel for the Securities and Exchange Commission, asserted that the Goldman Sachs Trading Corporation controlled or was able to exert substantial influence over a $1,694,494,103 industrial and financial empire in 1929.

   By From THE WALL STREET JOURNAL Washington Bureau, The Wall Street Journal, 322 words
   May 28, 1937

   WASHINGTON The SEC will hold public examination of the Goldman Sachs Trading Corp., subsequently named Pacific Eastern Corp., and its subsidiary and affiliated companies, it was announced in connection with the commission’s study of investment trusts and investment companies. The hearing will be held June 2 in Washington.

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4. Randy Wray rips Goldman:

   Goldman Sachs Vampire Squid Gets Handcuffed

   Flashback to the 1929 stock market boom, when Goldman faced the same dilemma. Since the famous firms like Goldman Sachs were partnerships, they did not issue stock; hence they put together investment trusts that would purport to hold valuable equities in other firms (often in other affiliates, which sometimes held no stocks other than those in Wall Street trusts) and then sell shares in these trusts to a gullible public. Effectively, trusts were an early form of mutual fund, with the “mother” investment house investing a small amount of capital in their offspring, highly leveraged using other people’s money. Goldman and others would then whip up a speculative fever in shares, reaping capital gains through the magic of leverage. However, trust investments amounted to little more than pyramid schemes—there was very little in the way of real production or income associated with all this trading in paper. Indeed, the “real” economy was already long past its peak—there were no “fundamentals” to drive the Wall Street boom. It was just a Charles Ponzi-Bernie Madoff scam. Inevitably, Goldman’s gambit collapsed and a “debt deflation” began as everyone tried to sell out of their positions in stocks—causing prices to collapse. Spending on the “real economy” suffered and we were off to the Great Depression. Sound familiar?

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5. failures of regulation and supervision, followed by failures to immediately sustain agg demand via fiscal policy.

   we don’t even understand how to regulate corps with the built in moral hazard of limited liability, never mind regulate banks with deposit insurance funded liabilities.

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