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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, May 18, 2010

Goldman Sachs: A moral failing

An interview with Lia Petridis Maiello:


Joseph Stiglitz: The problem on Wall Street is that we had bought into the idea that
money is everything, and that the metric of whether you are doing well for the economy is how much money you were making for yourself. To me there were two very serious moral failings. One is that so much energy went into exploiting the poorest Americans; selling them houses they knew were beyond their ability to pay, with mortgages that were exploitive. There were people who called themselves mortgage brokers supposedly looking for the best mortgage, but in fact were looking for the worst mortgage. The whole hosts of mortgages that are designed to maximize fees basically rob the poorest people of all their life savings. The irony was that the financial markets were hoisted on their own petard, as I point out in my book. That is to me, one of the most serious moral failings on the part of the financial markets. The second is while Bernie Madoff represented a pyramid scheme engaging in illegal activity, much of what the financial markets were doing was perhaps legal, but clearly unethical, or borderline. That the financial markets did not seem to see much distinction is a severe criticism. A good example is what Goldman Sachs did; how they sold products that they knew were bad, so bad that they were actually selling them short, betting on the fact that they would lose money. The whole debate in their mind is whether what they did was legal or not. The unanimity that it was immoral that they did not disclose to the buyers that they thought these were so crappy that they were going to lose money on them and the fact that they see nothing wrong with that suggests that they live in a parallel universe, a different world, a different moral compass than the rest of society.

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Anonymous said...


Mapley, who resides in Switzerland but also has homes in the Cayman Islands and the United States, said he met with lawyers from Baach Robinson when he was still serving as one of the fund's independent directors and urged them to sue Goldman.

He stepped down from the fund's board last summer and hasn't been involved in any settlement talks with the investment bank.

"We found this aggressive behavior by Goldman," said Mapley, who still serves an independent director for a number of other offshore hedge funds. "We started uncovering certain practices that were beyond the norm."

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