GoldmanSachs666 Message Board

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

Monday, November 29, 2010

Goldman Sachs and "Celf-Interested"

If you are interested in knowing just how market making and proprietary trading are differentiated in Goldman Sachs deals, you may want to read ProPublica's Jesse Eisinger's piece called Trading for the Client? Or Winning on Its Own? which examines a Goldman Sachs trade called "Celf Partnership."

The Epicurean Dealmaker blog carries the examination of the differences further and shows that market making and proprietary trading actually lie on a continuum and then explains in detail how they differ.

The excerpt below from the article called A Client Is Not a Counterparty sums up The Epicurean Dealmaker's observations of Eisinger's piece:
Enough with the history lecture. The major point you should take away from the dissertation above is that everything an investment bank normally does in securities markets requires it to put capital at risk. Low-risk, agency type businesses like underwriting and traditional market making lie on the same spectrum as full-blown proprietary trading, if only at different ends. There is no bright line between market making and prop trading, if only because a market maker may unintentionally take securities into inventory for a long time, because no buyer happens to be available, whereas a prop trader may make money by scalping basis points in high speed trading of liquid markets.

But the blurry line between market making and proprietary trading doesn't mean we can't identify proprietary investing—or, more specifically, acting like a principal investor—when we see it. The only time Goldman Sachs acted remotely like an agent in the scenario Jesse Eisinger described above was when it underwrote the original CELF securities offering in 2008. Even then, its client was Goldman Sachs itself, which sold the vast majority of loans underlying CELF to the securitization vehicle as principal. How interested do you think Goldman was in selling those securities to investors for an attractive price? Can you imagine its concerns as underwriter might have been subordinated to its interest as seller in getting the highest price? I can.

In any event, Goldman's actions in 2010 bear absolutely no resemblance to behaving like an agent when it purchased the outstanding CELF securities and liquidated them. It did not behave like a normal market maker, buying securities from one investor and selling them to another. It paid an arm's length price, determined after an auction run by a third party, to the investor it originally sold the AAA rated tranche to. It then triggered the liquidation of the securitization by purchasing a majority stake in its equity. With respect to the seller of the AAA tranche, it acted as a pure trading counterparty. A principal.

Therefore, Goldman's attempt to wrap its behavior in the holy shroud of client service:

"Our client decided to sell its investment," the firm said in a statement. "It took independent advice and ran a competitive sale process. We offered the highest price. This is a good example of helping a client achieve its objective, and underscores the critical importance banks play in using their capital to facilitate transactions on behalf of clients."
is nothing more than a patently disingenuous dodge.

By the same reasoning, my local pharmacist becomes my client every time I buy Preparation H to soothe the ass chapping Goldman Sachs gives me when they spout such pure, unadulterated horseshit.

I don't think so.

Read the full article here


Anonymous said...


UPS, Dow, Northrop Grumman Borrow Money to Fund Pension Plans; Massive Lies at CalPERS to Hide Pension Losses

Much has been written about The California Public Employees’ Retirement System (CalPERS) being underfunded by $500 billion due to massive investment losses over the last decade, but now we have video of a CalPERS Senior Pension Actuary, Kung-pei Hwang, describing how they intend to change basic assumptions in their financial model to (please allow me to mix my metaphors) Hide The Decline in their assets held for municipal, county, and state employee’s retirement.

Through this statistical gimmickry, CalPERS can push the loss into later years and appear solvent today. Of course, at some point in the future it will need to raise funds from state and local governments to compensate for these losses. But for now, they seem content to hide the disastrous condition of their fund.

Anonymous said...



Anonymous said...

Is it a U.S. bank?

Yes, it’s a U.S. bank.

One that still exists?

Yes, a big U.S. bank.

The biggest U.S. bank?

No comment.

When will it happen?

Early next year. I won’t say more.

What do you want to be the result of this release?

[Pauses] I’m not sure.

It will give a true and representative insight into how banks behave at the executive level in a way that will stimulate investigations and reforms, I presume. Usually when you get leaks at this level, it’s about one particular case or one particular violation.

For this, there’s only one similar example. It’s like the Enron emails. Why were these so valuable? When Enron collapsed, through court processes, thousands and thousands of emails came out that were internal, and it provided a window into how the whole company was managed. It was all the little decisions that supported the flagrant violations.

This will be like that. Yes, there will be some flagrant violations, unethical practices that will be revealed, but it will also be all the supporting decision-making structures and the internal executive ethos that cames out, and that’s tremendously valuable. Like the Iraq War Logs, yes there were mass casualty incidents that were very newsworthy, but the great value is seeing the full spectrum of the war.

You could call it the ecosystem of corruption. But it’s also all the regular decision making that turns a blind eye to and supports unethical practices: the oversight that’s not done, the priorities of executives, how they think they’re fulfilling their own self-interest. The way they talk about it.

Anonymous said...

And you think the deck is not stacked against the average guy? They are all a BIG JOKE!!

read this..and make sure you forward it!

More Fed Shenanigans: TILA

In short, what this means is that if the bank violated black-letter law in making a loan to you the change would require you to pay off the entire principal before you could assert your rights and remedies.

This is like requiring someone who was robbed to somehow come up with the money to repay the owner of the property that was stolen before the robber can be held to account for his criminal act.


No wonder The Fed doesn't want this one out in the public eye.

Post a Comment