Is this all the satisfaction that the public is going to get for all the penury caused by the likes of Goldman Sachs: It is not enough! There have to be proper trials and complete disclosure of all the wrongdoing plus the firings of all the executives, including Lloyd Blankfein, who were in power during the buildup to the financial crisis. The People will not rest until balance is restored to the financial system.
Goldman Sachs guys were so successful in deregulating the financial laws that we seem to have to go back to the 1930's to find laws that will bring some small amount of justice.
JP Morgan Settlement With SEC Recalls Case Against Goldman Sachs
By Hugh Son, Donal Griffin and Jesse Hamilton - Bloomberg Businessweek
JPMorgan Chase & Co.’s deal to settle a U.S. regulator’s claims that the bank misled buyers of mortgage-linked securities before the housing market collapsed echoed a case brought last year against Goldman Sachs Group Inc.
JPMorgan agreed to pay $153.6 million to end a Securities and Exchange Commission suit. The SEC alleged that the New York- based bank failed to tell investors in 2007 that a hedge fund helped pick, and bet against, underlying securities in the collateralized debt obligation they purchased. In July, Goldman Sachs paid a record $550 million for failing to inform clients in 2007 that it allowed a hedge fund that also bet against housing to help formulate the CDOs.
“It’s the same general allegation of wrongdoing,” Robert Khuzami, enforcement chief of the SEC, said yesterday in a Bloomberg Television interview. “The message in both cases is if you engage in this kind of wrongdoing, if you mislead investors, you’re going to pay a fine.”
The SEC is targeting mortgage-industry firms from loan originators including Countrywide Financial Corp. to Wall Street CDO underwriters. The regulator has looked at Citigroup Inc., Deutsche Bank AG, UBS AG and Morgan Stanley, a person with knowledge of the matter has said.
Like Goldman, JPMorgan’s brokerage unit, JPMorgan Securities LLC, didn’t admit or deny wrongdoing in settling. Unlike Goldman, the claims against the firm relied solely on a section of the Securities Act of 1933 that connotes a “lesser violation,” said Ed B. Horahan, a Washington-based securities lawyer.
Goldman Sachs settled under a section of the Securities Exchange Act of 1934 that says the accused firm knew what it was doing, while JPMorgan’s case is closer to negligence, Horahan said. Michael DuVally, a spokesman for Goldman Sachs, declined to comment yesterday.
“JPMorgan simply admitted that it ‘messed up’ the documentation,” said Brad Hintz, an analyst with Sanford C. Bernstein & Co. The bank “pays a fine, announces a public mea culpa and has no more liability. This looks like a win for JPMorgan.” JPMorgan rose 1.1 percent to close at $40.91 yesterday in New York Stock Exchange composite trading.
The customers misled by the two banks also differed, according to the SEC suits. JPMorgan sold about $150 million of notes in the CDO, known as Squared, to about 15 firms including a not-for-profit Lutheran insurer, Thrivent Financial, and a New York City-based manager of General Motors Co. pensions.
Meanwhile, one of the biggest investors in Goldman Sachs’ Abacus CDO was Dusseldorf, Germany-based IKB Deutsche Industriebank AG. The German bank was aware of the risk associated with the securities and was “among the most sophisticated mortgage investors in the world,” Goldman Sachs said in April 2010.
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