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Tag: Goldman Sachs

The SEC Should Be Careful Not to Spend All $550 Million in One Place

Hopefully they’ll spread it around, you know, with lifetime memberships to: ladyboyjuice.com, kinkycomments.com, sexyavatars.net, cafebuckskin.blogspot.com et al.

Goldman Sachs has agreed to pay $550 million to the Securities and Exchange Commission, the largest penalty ever paid by a Wall Street firm, to settle charges of securities fraud linked to mortgage investments.

Under the terms of the deal, Goldman will pay $300 million in fines to the Treasury Department, with the rest serving as restitution to investors in the mortgage-linked security. Goldman will not admit wrongdoing, though it will admit that its marketing materials for the investment “contained incomplete information.”

That doesn’t sound nearly as fun but we understand a few people may have gotten hurt on this deal.

Goldman Settles With S.E.C. for $550 Million [NYT]

Accounting News Roundup: Times Square Gets Back to the Grind After Bomb Scare; Down with the Corporate Income Tax; The Politics of Spending | 05.07.10

Times Square Goes Back to Work After Bomb Scare [FINS]
FINS checked in with several companies who have locations in the Times Square area to see if things are back to normal after last weekend’s failed bombing. Most companies are officially mum on the issue including our favorite TS resident, Ernst & Young, who was quoted as to have, “reached out [to their employees] on an informal basis.”

And by “informal” apparently that means “nothing” in some cases We checked with a couple of our own sources at E&Y and we were told that they had not received any communication at all. If there’s an email floating around out there, let us know but it sounds like any reassurance of safety was passed around on a post-it note.


A.I.G. Said to Dismiss Goldman [NYT]
Back in the game AIG! Thanks for the good times GS, Citigroup and Bank of America will take it from here. All it took was a little money for AIG to realize that they were in an abusive relationship.

Time to Junk the Corporate Tax [WSJ]
Michael Boskin argues for dumping the corporate income tax in an op-ed in yesterday’s Journal, citing several reasons that it sucks big time including double taxation, “Corporate income is taxed a second time at the personal level as dividends or those capital gains attributable to reinvestment of the retained earnings of the corporation. Between the new taxes in the health reform law and the expiration of the Bush tax cuts, these rates are soon set to explode.”

…And that stakeholders ultimately bear this cost, “the corporation is a legal entity; only people pay taxes. In a static economy with no international trade, the tax is likely borne by shareholders. The U.S. economy is neither static nor closed to trade, and taxes tend to be borne by the least mobile factor of production. Capital is much more mobile globally than labor, and the part of the corporate tax that is well above that of our lowest tax competitors will eventually be borne by workers.”

The Political Economy of Consumption: ‘Tis Better To Give, and Give, and Give [Tax Vox]
This sums up why America’s deficit problems and citizens personal debt problems will never be fixed:

Not to stereotype, but nations do have personalities. Italians eat. Russians drink. Americans spend. And when anything—or anyone—gets between us and our consumption, watch out.

Recessions make us grumpy in part because we can’t consume as much as we like. In the depths of the current downturn, the savings rate in the U.S. topped 5 percent. But retail sales have been rising since October, and the savings rate has fallen in half. I suspect Americans won’t really feel better until we drive our savings rate back to zero.

Accordingly, politicians have to pander to masses about “cutting taxes” and “reducing spending” when it’s very simple and popular to the do the former, while in reality it’s very difficult and unpopular to do the latter.

Goldman Sachs May Inspire a Redefinition of “Fiduciary Duty”

This story is republished from CFOZone, where you’ll find news, analysis and professional networking tools for finance executives.

One bit of commentary I’ve noticed in the blogosphere following yesterday’s Goldman show is that the bank could toggle back and forth between being an investment advisor and a broker dealer when it came to any fiduciary duty it owed to investors in its crappy mortgage deals.

That may or may not be a loophole that needs closing, as Senator Collins’ line of inquiry suggested. Surely, banks like Goldman shouldn’t be able to use it as such.

But it’s important to remember that this is not an issue in the SEC’s case against the bank.


Take another look at the complaint. It charges Goldman with violations of three specific provisions of the securities laws, Section 17 (a) of the Securities Act of 1933 and Section 10 (b) and Rule 10-b (5) of the Securities Exchange Act of 1934. All of them relate to deceit, plain and simple.

Here’s the exact wording from the complaint: Goldman, the SEC charges, “employed devices, schemes or artifices to defraud, made untrue statements of material facts or omissions of material facts necessary in order to make the statements made, in the light of the circumstances under which they were made, not misleading, or engaged in transactions, practices or courses of business which operated or would operate as a fraud or deceit upon persons.”

Nope, nothing about fiduciary duty there.

Goldman’s defense here, essentially, is that the bank didn’t have to disclose those facts the SEC refers to, because the investors in the deal in question were sophisticated or already knew or should have known that another party that was betting against them had helped select the portfolio, and that any other information it failed to disclose wasn’t material.

Nothing about fiduciary duty there, either.

So while the back and forth over that issue may be important to any legislation aimed at reforming such practices, it’s not strictly relevant to the legal case.

Of course, we’re talking about a jury trial here, so the atmospherics surrounding the case, including what the bank should have done that it wasn’t legally required to do, aren’t totally irrelevant.

Anyway, I was somewhat puzzled over the significance of the fiduciary issue when I stumbled across it earlier this morning. And I figured others might be as well.

Accounting News Roundup: Goldman CFO’s ‘Unfortunate’ Response; EU Prepares to Scrutinize Auditors; SEC Chief Accountant: June 2011 Deadline for Convergence Is ‘Arbitrary’ | 04.28.10

Carl Levin To Goldman CFO: When You See ‘Sh–ty Deal’ E-mail, ‘Do You Feel Anything?’ [TPM]
Late in the proceedings of yesterday’s epic Senate subcommittee hearing (involving some of the Almighty’s finest), Goldman CFO David Viniar may have had a bit of a Freudian slip when he responded to potty-mouth Senator Carl Levin’s badgering.

Levin asked Viniar how he reacts to hearing about the email. “Do you feel anything?” Levin asked. Viniar replied: “I think that’s very unfortunate thich got a smattering of laughter from around the room. Levin asked Viniar how he reacts to hearing about the email. “Do you feel anything?” Levin asked. Viniar replied: “I think that’s very unfortunate to have on e-mail,” which got a smattering of laughter from around the room. “On an e-mail?” Levin shot back angrily. “How about feeling that way?” Viniar started to backtrack: “I think that’s a very unfortunate thing for anyone to have said in any form.” “How about to believe that and sell that?” Levin asked. “I think that’s unfortunate as well,” Viniar responded.

That unfortunateness is in no particular order.

Brussels to scrutinise role of auditors [FT]
The EU has had it with auditors in their current form and is turning their stink eye towards the profession with a whole lot of skepticism, especially since Ernst & Young got in trouble over you-know-what.

Michel Barnier, the new EU internal market commissioner, joined the debate on Tuesday saying that the role of auditors needed closer scrutiny now that the financial turmoil of the past two years was subsiding.

“I’m convinced that it is the right time to launch a real debate at European level on the subject of audit. This conviction is reinforced by the questions recently raised in the context of the audit of the accounts of US bank Lehman Brothers,” Mr Barnier said.

The FT reports that the EU is kicking off this increased level of scrutiny by publishing a green paper this fall on the subject that will examine the way “audit firms are owned and governed…the concentration in the audit market and its implications on financial stability, the emergence of small and medium-sized practitioners, the audit of smaller companies and international standards on auditing,” and also the supervision of global audit firms.

PwC pays £427,000 damages over valuation work [Accountancy Age]
The original suit was for £35 million; that would a W for P. Dubs.

Miami accountant’s workers accused of aiding fraud [Miami Herald]
Two employees of “Miami’s go-to forensic accountant if you want to get ripped off” Lewis Freeman have been charged with conspiring with him in the embezzlement scheme that he pleaded guilty to last month.

SEC Chief Accountant Says Convergence Need Not Be Completed by June 2011 [Journal of Accountancy]
No rush on that, sayeth James Kroeker, on convergence by June 2011:

SEC Chief Accountant James Kroeker told the JofA Tuesday that he would support the boards’ cutting the number of projects due in June 2011, provided there was good rationale for a delay.

“June 30, 2011, is an arbitrary deadline and it’s not one that’s been put in place by the SEC or by our road map,” said Kroeker.

In Non-Goldman Sachs News, Mary Schapiro Doesn’t Think Much of Your Report on the SEC’s Response to Allen Stanford

In case you haven’t turned on a TV, been on the Internet or talked to single human being today you’re aware that Mary Schapiro and the Commission are little busy raining shit all over Team Jehovah.

As fun as this must be for the SEC, for some reason there are a few people that would like to discuss the SEC’s reaction to a Ponzi scheme whose alleged perp will likely die awaiting trial.


Even though Mary Schapiro can’t believe this timing (!), fine, she’ll humor you. But don’t interrupt again. They are trying to God’s work (and maybe win over some voters).

The following is a statement from SEC Chairman Mary L. Schapiro regarding SEC Office of the Inspector General (OIG) Report 526 — “Investigation of the SEC’s Response to Concerns Regarding Robert Allen Stanford’s Alleged Ponzi Scheme”:

“This report recounts events that occurred at the Commission between 1997 and 2005. Since that time, much has changed and continues to change regarding the agency’s leadership, its internal procedures and its culture of collaboration. The report makes seven recommendations, most of which have been implemented since 2005. We will carefully analyze the report and implement any additional reforms as necessary for effective investor protection.”

In other words, “I’m turning this ship around, and most of your bullshit suggestions are already in place, so how about you take your light your OIG report on fire?”

Accounting News Roundup: Substance at Utah IRS Building Was ‘Non-hazardous’; Goldman Sachs Discloses Its Bad Publicity Risk; Resort Where Tiger Gave Apology Files for Bankruptcy | 03.02.10

• Suspicious substance at IRS called non-hazardous [KSL5]
After everything that has happened lately that is IRS-related, somehow that white powdery substance showing up at an IRS building and three employees having seizures is one giant coinky-dink.


• Goldman Discloses a New Risk: Bad Publicity [DealBook]
Team Jehovah pushed the button on its 10-K yesterday and because they’re the type of company to keep everything on the up and up, they put it out there that when every media source calls you out each time you break wind, you have a entirely new problem:

“Press coverage and other public statements that assert some form of wrongdoing, regardless of the factual basis for the assertions being made, often results in some type of investigation by regulators, legislators and law enforcement officials, or in lawsuits.

…adverse publicity…can also have a negative impact on our reputation and on the morale and performance of our employees, which could adversely affect our businesses and results of operations.”

You don’t think the name calling and nuclear testicle jokes can affect the bottom line? Think again. PwC bought it. Shouldn’t you?

• Sawgrass Resort Linked to Tiger Woods Apology Files Bankruptcy [Bloomberg]
At present, avoiding any contact with Tiger seems to be prudent.

Review Comments | 07.22.09

beer.jpg• Amazon to Acquire Zappos.com for $847 Million – “Amazon says it is paying for the acquisition with 10 million shares of stock worth approximately $807 million. In addition, Amazon said it will provide Zappos employees with $40 million in cash and restricted stock units.” [Bits/NYT]
• UK ‘is losing 52 pubs each week’ – Where will the UK accountants go for lunch? [BBC]
• Who needs audit? [Accountancy Age]
• Chrysler says dealer legislation could force liquidation – “Chrysler Group could again face the prospect of liquidation if legislation aimed at reversing its decision to terminate contracts with 789 dealers becomes law, a company executive said on Wednesday.” [Reuters]
• Goldman Sachs Payments to U.S. Give 23% Return to Taxpayers – LB says “you’re welcome” [Bloomberg]

Review Comments | 07.21.09

Ben_Bernanke.jpg• Bernanke Sheds Light on Exit Strategy – “Federal Reserve Chairman Ben Bernanke shed light Tuesday on the toolkit the central bank can employ to unwind its crisis measures, but he made clear to lawmakers that the economy remains too weak to start tightening monetary policy.” Better than no exit strategy [WSJ]
• CIT Expects Loss of $1.5 Billion, May Seek Bankruptcy – “CIT Group Inc., the 101-year-old commercial lender seeking to avoid collapse, said it expects to report a loss of more than $1.5 billion for the second quarter and may need to file for bankruptcy if it’s unable to tender for notes maturing next month.” [Bloomberg]
• Apple’s quarterly profit tops forecasts – The good results… [Reuters]
• Yahoo sees drop in income from operations this quarter – …and the bad. [Reuters]
• Which Of Alan Greenspan’s More Quotable Quotes Will Bite Him In The Ass On The Big Screen? [DealBreaker]
• The Goldman Way to Celebrate: a Parody – Well played LB. Well played. [DealBook]

Vampire Squid, Broken Down

For you viewing pleasure, FT Alphaville has provided some illustrations so that we might better conceptualize Matt Taibbi’s labeling of Goldman Sachs as “a great vampire squid wrapped around the face of humanity, relentlessly jamming its blood funnel into anything that smells like money”, which still makes us wince.
All we’ll say is that includes Darth Vader so that makes it worth a look.
Vampire squid, illustrated edition [FT Alphaville]

Oliver Stone Movie on Goldman Sachs to be Coming This Fall

Because we love ourselves a good cat fight, we feel obligated to tell you about the current scratch and screech fest currently going on between Goldman Sachs and Matt Taibbi, a contributing editor at Rolling Stone. Taibbi wrote a less than flattering article on Goldman in Rolling Stone’s latest issue (which is not available online. Read: Lame).
Why, do you ask, would Goldman waste their time on an article in a formerly renown, now ridiculously corporate magazine? For starters, Taibbi describes GS this way, “The world’s most powerful investment bank is a great vampire squid wrapped around the face of humanity.”
Not a lot of room for subjective interpretation there. Quoting a response from a Goldman spokesman via the New York Post, “The bank’s spokesman, Lucas Van Praag, [said]: ‘[Taibbi’s] story is an hysterical compilation of conspiracy theories,’ he wrote in an e-mail. ‘Notable ones missing are Goldman Sachs as the third shooter [in John F. Kennedy’s assassination] and faking the first lunar landing.'”
We admit, on one hand, that Taibbi might be a tad on the nutty side but the mere fact that Goldman is acknowledging the article with any kind of response puts us in the strangely curious camp.

Goldman Gotcha [New York Post]