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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

Thursday, October 29, 2009

Are Goldman Sachs 'Special' Clients Front Runners?

My guess is that this is going to make those clients of Goldman Sachs who didn't get that inside info very mad. It sure seems like Goldman is screwing some clients for the benefit of others. I wonder how many of those clients that are getting screwed are pension funds that don't give a damn about the funds (or the soon-to-be retirees) and are there just to collect the fees? How many other hedge funds are out there paying for 'special' service? This may be much ado about nothing but at this point, I am not about to give them the benefit of the doubt on anything.

Late last night the Financial Times broke the news that the hedge fund firm Galleon Group paid $250 million to its Wall Street banks last year in return for received market information that other investors did not get.

Those banks need to come forward immediately and explain what information they were selling to Galleon

The FT's report didn't specify which banks provided the information but noted that Morgan Stanley and Goldman Sachs were Galleon's top providers of hedge fund services and prime brokerage. Both declined to comment on the story. But the allegations are so explosive that both firms are going to have to start talking.

The problem is that Galleon allegedly got more than just "market color" or advanced looks at analyst views through market "huddles." The firm was known for pushing its contacts at banks for hints about big buy and sell orders. If either Goldman or Morgan Stanley were supplying this, it sounds like they were allowing the fund to front-run their other clients.


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