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Fraud*
According to the Collins English Dictionary 10th Edition fraud can be defined as: "deceit, trickery, sharp practice, or breach of confidence, perpetrated for profit or to gain some unfair or dishonest advantage".[1] In the broadest sense, a fraud is an intentional deception made for personal gain or to damage another individual; the related adjective is fraudulent. The specific legal definition varies by legal jurisdiction. Fraud is a crime, and also a civil law violation. Defrauding people or entities of money or valuables is a common purpose of fraud, but there have also been fraudulent "discoveries", e.g. in science, to gain prestige rather than immediate monetary gain
*As defined in Wikipedia

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Friday, April 10, 2009

Did Goldman Sachs Manipulate World Oil Prices?

NOTE: A great article from Forbes that begins to explore the underbelly of Goldman Sachs.

Did Goldman Goose Oil?
Christopher Helman and Liz Moyer
Forbes Magazine - March 25, 2009

How Goldman Sachs was at the center of the oil trading fiasco that bankrupted pipeline giant Semgroup.

When oil prices spiked last summer to $147 a barrel, the biggest corporate casualty was oil pipeline giant Semgroup Holdings, a $14 billion (sales) private firm in Tulsa, Okla. It had racked up $2.4 billion in trading losses betting that oil prices would go down, including $290 million in accounts personally managed by then chief executive Thomas Kivisto. Its short positions amounted to the equivalent of 20% of the nation's crude oil inventories. With the credit crunch eliminating any hope of meeting a $500 million margin call, Semgroup filed for bankruptcy on July 22.

But now some of the people involved in cleaning up the financial mess are suggesting that Semgroup's collapse was more than just bad judgment and worse timing. There is evidence of a malevolent hand at work: . . . read more about the dark and evil side to Goldman Sachs - Click Here

9 COMMENTS:

Anonymous said...

from salon.com -

MARCH 19, 2009 2:43PM
Will Someone Please Tell the Real AIG scandal: Goldman Sachs

I will confess to having mis-stated one number on this affair, which over estimated the bonuses, but that actually makes my argument stronger, the argument being that the press is being mislead, or deliberately misleading the public, as to the real nature of the scandal around AIG.

As to numbers, AIG is said to be paying out bonuses of $170 million.

As to numbers, the AIG bailout has cost taxpayers $170 billion.

$170 million?

So what?

It would seem fairly obvious that the real question for lawmakers is not to encourage the public suicide of executives over $170 million, which is outrageous, but then who knows if Grassley gets lots of Goldman money, but that the proper job of lawmakers is rather to guarantee that $170 billion is spent in a useful fashion.

I would submit that it is already demonstrable that a signinifcant sum, in particular any money paid to Goldman Sachs, should be considered an outright material and probably criminal fraud, and in which if one examined direct payments the total amount of amount of money paid by the Treasury to Goldman Sachs exceeds the $5 billion already reported in the press.

That is the real money, the real scandal, not stupid bonuses, that is a deliberate distraction.

To understand the real scandal, follow the money.

Moreover, when one examines the Federal Reserves purchases of securities, Goldman Sachs is effectively receiving tens of billions of dollars from taxpayers for having committed the effectively material and possibly criminal fraud outlined below.

Furthermore, moving back to direct Treasury payments, when one examines foreign banks and other financial entities abroad receiving payments via AIG, the hands of Goldman will assuredly be quite prominent as well, if more indirect in character.

This is the real scandal, that Goldman effectively speaking committed a material fraud at taxpayers expense, and the level of difficulty required to demonstrate that this is so is so low that one can only conclude that this flap about bonuses is basically being manipulated by elements of the political classes in the pocket of Goldman Sachs who will not allow the truth to be told, and who are attempting to misdirect public attention in order to continue to extract the People's money for private profit.

As to the material, and I believe outright criminal, fraud, Goldman Sachs was one of the biggest originators and sellers of collateralized mortgage and collateralized debt obligations (CMO's and CDO's in Wall Street parlance).

It was Goldman Sachs more than any other entity who was peddling these now so-called "toxic assets" on a massive scale as AAA rated safe investments for your grandmother's CD account.

At the same time that it was saying these now "toxic assets" were safe, Goldman Sachs was purchasing and advising clients to purchase insurance protection on these investments called credit default swaps from AIG on a scale that was wildly inconsistent with the presentation of the original securities being deserving of a AAA rating.

In technical terms, their purchase of credit default swaps at this level proves that their probability estimates as to risk was not as stated in the origination of the security.

That constitutes a material, and I believe, crimnal fraud and breach of insurance contract in terms of the credit default swap.

What the lawmakers should do is say is this:

"Goldman Sachs, give the People's money back that we have given you through AIG, because you breached your side of the credit default swap insurance contract in the first place by mis-representing the level of risk in the contract as presented to both investors in terms of the underlying assets the CDO's and CMO's, and in terms of the risk being inusred in the derivative/insurance policy/credit default swap.

The contract is therefore null and void in the event of a material mis-statement, and your hedge fund activities prove it as a matter of mathematical law.

The proof lies in your behavior in the purchase of the credit default swaps at the scale that was done which constitutes demonstrable mathematical proof that this was not a hedging/insuring activity, but a speculative activity that demonstrates your firm's belief that the assets you were peddling were not AAA, but trash, and you are therefore guilty of material, and quite possibly, criminal, frauds in both the original securitization and more importantly, guilty of material and possibly criminal frauds in the purchase of the credit default swaps from AIG, and AIG, and therefore the taxpayers, do not owe you a dime, and your securities licenses are now being examined for sanctions."

That would be the right way of addressing this scandal, because that gets at the heart of the matter.

terrorpatriot said...

To fully comprehend the full magnitude of our global economic enslavement you must dig deeper.
This started in 1913 with the fraudulent enactment of "The Federal Reserve Act"
Goldman Sachs and our Central Government are only pawns or overseers on this "American Plantation" which has come to be owned by a relative handful of elitist legacy families.
The economic slaves are called Democrats and Republicans at the moment. Divided and ignorant.
It is time for "American Revolution II" TP.
www.terrorpatriot.blogspot.com

C.J. Walsh said...

Goldman Sachs was forecasting a rise in oil prices per barrel as far back as April of 2005 as high up as $150-$200 per barrel within the following 2 to 3 years. If you look at Goldman's investment track during that time span, it is evident that they were not only consistently tied in with speculation on energy prices, but they also were making predictions of high costs whenever the price of oil began to decrease.

July 2, 2004 - The U.S. Securities and Exchange Commission alleged that Goldman, the Number 3 securities firm, sent e-mails to investors with details of PetroChina's $2.9 billion sale before the initial public offering in April, 2000, had clearance from the agency. Beijing-based PetroChina is China's biggest oil producer. (Goldman Sachs settles with SEC. (n.d.). Toronto Star (Canada), Retrieved April 12, 2009, from Newspaper Source database.)

Jun 17, 2005 - Goldman Sachs leverages a buyout from Pegasus Partners of Coffeyville Resources a Kansas City oil refinery. (Jacobs Griekspoor, P. (2005, June 17). Goldman Sachs negotiates to buy profitable Kansas City, Kan., oil refinery. Wichita Eagle, The (KS), Retrieved April 12, 2009, from Newspaper Source database.)

Nov. 6, 2005 - When Goldman Sachs released a third bullish oil price forecast last month, market watchers became more outspoken about what they see as its unhealthy grip on oil prices. According to respected oil industry publication Petroleum Intelligence Weekly, on each occasion, the Goldman report has come out as prices were in decline. Its latest report came out when crude oil futures were at their lowest for three months. Some analysts were arguing that the price had peaked. Nevertheless, some argue that the Goldman Sachs Commodity Index gives Goldman a bias in favour of rising prices. More than $10bn was injected into the index between July and September, and so far this year, its investors, who like the fund because it saves buying actual barrels, have seen returns of 41.6 percent for the year. If the oil price declines, Goldman would lose untold fees. (Orange, R. (2005, November 6). Goldman oil super spike theory may distort price, say analysts. Sunday Business (United Kingdom), Retrieved April 12, 2009, from Newspaper Source database.)

Jan. 25, 2007 - Goldman Sachs and Morgan Stanley are part of a group preparing a $15 billion (Pounds 7.6 billion) bid for the oil and gas businesses of Dominion Resources. The deal highlights the growing grip that investment banks in the US are exerting on private equity deals. (York, T. (n.d.). Goldman role in $15bn bid shows US banks' private equity interest. Times, The (United Kingdom), Retrieved April 12, 2009, from Newspaper Source database.)

July 11, 2007 - Goldman Sachs sells off shares of large oil companies like, Royal Dutch Shell, and BP. (Clark, M. (2007, July 11). GOLDMAN PUTS SELL SIGN OVER THE OIL GIANTS. Evening Standard, Retrieved April 12, 2009, from Newspaper Source database.)

Sept. 16, 2007 - GOLDMAN Sachs and Ion Equity have joined the race to buy the Whitegate refinery in Cork, which is being sold by ConocoPhillips, the American multinational. (Coffey, A. (n.d.). Goldman Sachs enters the bidding battle for Whitegate. Sunday Times, The, Retrieved April 12, 2009, from Newspaper Source database.)

May 8, 2008 - INFLATION worries worsened as the price of oil hit yet another record high. The cost of a barrel of crude surged above $122 in New York for the first time because of fears of supply shortfalls. An attack on Royal Dutch Shell's Nigerian facilities by rebels over the weekend sparked jitters. Turbo-charged demand from China, the world's second biggest oil consumer, also helped push the cost of crude north. Oil will probably soar to between $150 and $200 a barrel within two years, Goldman Sachs analysts claimed. (SUPPLY FEARS SHOOT OIL TO A RECORD HIGH OF $122. (2008, May 8). Daily Mail, Retrieved April 12, 2009, from Newspaper Source database.)

June 19, 2008 - In a pair of lengthy and sometimes testy closed-door sessions in the Senate last week, executives from Goldman Sachs and Morgan Stanley , two of Wall Street 's largest investment banks, made the case that their multibillion-dollar investments in energy contracts have not led to higher oil prices. Rather, they told Democratic staff members of the Energy and Natural Resources Committee that the trades allow international markets to operate efficiently and that the run-up in oil prices results not from speculation but from actual imbalances of supply and demand. (Birnbaum, J. (n.d.). Wall Street Lobbies to Protect Speculative Oil Trades. Washington Post, The, Retrieved April 12, 2009, from Newspaper Source database.)

Sept. 3, 2008 - Goldman raises its buying of BP, due to decrease in share values in European oil. (Clark, M. (2008, September 3). BP BUCKS OIL PRICE WOE AFTER GOLDMAN'S BOOST. Evening Standard, Retrieved April 12, 2009, from Newspaper Source database.)

Sept. 17, 2008 - GOLDMAN Sachs has slashed its forecast for crude oil prices in New York, saying the market has now "overshot to the downside". (GOLDMAN CUTS ITS OIL FORECASTS. (2008, September 17). Evening Standard, Retrieved April 12, 2009, from Newspaper Source database.)

Anonymous said...

This is a good listen, which may explain a few things too.
http://www.projectcamelot.net/lindsey_williams_the_next_12_months_the_byte_show_jan_2009.mp3

Cheap Viagra said...

One of the most important things on the planet is oil prices.
I would like scientist to discover a new usable energy which is environment friendly in order to reduce the greenhouse effect.

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James Hardy said...

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