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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, November 2, 2010

Goldman Sachs and GSAMP 2006-S3

Fortune Magazine has written a series on Goldman Sachs's issuance of mortgage-backed securites called GSAMP 2006-S3. These securities were "junk" because they either defaulted or were downgraded. GS earned money on fees and by hedging (shorting) their inventory of mortgage securities. GS filings with the SEC contain warnings to investors of the many pitfalls of buying these securites--ass covered! Moody's and S&P rated these securities.

Where's the outrage over Goldman Sachs's other mortgage foray?
By Allan Sloan

(FORTUNE) -- Back in 2007, before Goldman Sachs (GS, Fortune 500) had become a 24/7 whipping boy, my colleague, Doris Burke, and I wrote an article showing how Goldman had peddled a particularly wretched issue of mortgage-backed securities to its customers, and had also bet against the kind of mortgages that made up the securities.

Goldman hasn't been charged with any wrongdoing arising out of the issue we focused on, called GSAMP 2006-S3. But in many ways, it was a more outrageous deal than the Abacus 2007-AC1 "synthetic collateralized debt obligation" that provoked SEC charges filed on Apr. 16.

The SEC charge is that Goldman didn't disclose that John Paulson's hedge funds had helped assemble Abacus and were betting on a drop in value. However, all the allegedAbacus victims knew someone was betting against them, because that's how synthetic CDO's work: you can't have a long without a short.

But a regular mortgage-backed issue, like GSAMP is different. GSAMP investors -- who, like the Abacus players, were professional money managers -- had no way of knowing that Goldman had decided that the kind of mortgages GSAMP owned were real stinkers, and had made money betting against them. (Goldman says it didn't bet against GSAMP's securities, a statement I have no reason to doubt.)

So read our 2007 tale "Junk mortgages under the microscope" and the 2009 follow-up "Junk mortgages: It just gets worse," and shake your head. Or laugh bitterly. Or both. To top of page

Read the original article(s) here


Anonymous said...

Sinn Fein vs Goldman

October 28, 2010

The Sinn Féin Spokesperson on Workers Rights, Martin Ferris TD has claimed that the Government’s austerity programme is not only designed to pay for failed bondholders and speculators but is being advised by them. He referred to the fact that the Chairperson of Goldman Sachs Peter Sutherland whose Asset Management section holds Anglo Bonds has been advising the Government on the cuts.

Deputy Ferris said: “Apart from the economic and financial issues that we have discussed here for the past few days there is the whole moral and ethical aspect of the situation.

“All of the proposed misery is being planned to benefit failed speculators among whom are the Anglo bondholders. There are websites which have published the names of these companies and there are discussion groups on the internet about it. And yet no national newspaper here has regarded it as of sufficient importance.

“While most of the bondholders are European based there are Irish connections and no doubt some of our fine patriotic and charitable tax exiles have their noses in the trough.

“More importantly perhaps is the connection between all of this and the fact that representatives of these people are advising the Government on how best to make the rest of us pay for their mess.

“Take Peter Sutherland for example. He has held various high positions in this state and on behalf of this state abroad. His views are still given a lot of credence and he was recently widely quoted in claiming that this state had an obligation to protect the Anglo Irish bondholders.

“And of course he has been advising, in a totally disinterested way of course, the Government on how they should deal with the crisis. Among his proposals has been to sell state companies. And no doubt he probably knows chaps who might be interested in buying them at a fair price.

“How many of those who referred favourably to Sir Peter’s excellent advice also referred to his own possible self interest and the interest of his friends in all of this? He is, after all, Chairperson of Goldman Sachs whose Asset Management section is a key Anglo bondholder and which incidentally made profits of more than €13 billion last year.

“If our priority is to look after people like this, then the description given on one web site of Ireland as, ‘an international welfare state for super-rich bankers’ is all too accurate.”

Anonymous said...

Now What?

It's really too late for both parties. They're unreformable. They've squandered their legitimacy just as the US enters the fat heart of the long emergency. Neither of them have a plan, or even a single idea that isn't a dodge or a grift. Both parties tout a "recovery" that is just a cover story for accounting chicanery and statistical lies aimed at concealing the criminally-engineered national bankruptcy that they presided over in split shifts. Both parties are overwhelmingly made up of bagmen for the companies that looted America.

Anonymous said...

They must have promised Obama some pay day....

The Tragedy of the Obama Administration

But as far as I am concerned, those are secondary political issues. To me, his presidency began its fatal downward spiral once

he allowed Robert Rubin to determine his initial financial appointments.

By passing over more pragmatic candidates not tied to banks and Wall Street, the president missed his opportunity to rise to greatness.

The opportunity existed to get the renegade banks under control — to reduce their leverage, their recklessness, and to get their hands out of the taxpayers pockets.

That opportunity was squandered, and Obama ended up as a defender of the banking status quo.

Anonymous said...

It's tough when you have to operate out of the know...

(Reuters) - A former Goldman Sachs (GS.N) trader is shutting his Cypress Lane Asia hedge fund and returning investors' money a little more than a year after starting it, Bloomberg reported on Wednesday.

Shafiq Karmali, a former Goldman trader, started the long-short fund.

Several high profile "spinoff" hedge funds launched in Asia in the last few years, led by former hotshot traders and managers at large banks and hedge funds.

But several of the new managers have struggled while striking out on their own.

Joyce said...

Thank you all for the four comments above. They help us to see what is ahead for us. Anonymous #1, I plan to use your comment link for my next post.

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