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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

Tuesday, August 11, 2009

A Level 3 Problem at Goldman Sachs?

Commentary from Jim Sinclair of

Now that Goldman Sachs is a bank the potential change by FASB in their asset valuation auditing procedures could be a DISASTER for them.

August 10, 2009 — 7:49am ET By Jim Kim
Reuters has taken a close look at Goldman Sachs’s latest 10Q and come up with something interesting: Goldman reported a second-quarter net unrealized loss of $1.4 billion on its Level 3 derivatives. "The unrealized loss is significant because it represents a reversal of what had been a positive trend at Goldman." In the just prior quarter, Goldman Sachs reported a net unrealized gain of $975 million on its Level 3 derivatives. For all of 2008, Goldman reported a net unrealized gain of $5.58 billion.

This may reflect Goldman’s bet on various distressed assets, which seemed to pay off in 2008. But if it now finds itself on the wrong side of the market, we may have a reason to be slightly more cautious on Goldman’s earnings in the second half of the year. We’ll just have to see if this turns into a trend.

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