Goldman Sachs as a "Vast Criminal Enterprise"

If Goldman Sachs had shown any sympathy for the victims it stole money from via pensions, mortgages, savings and municipal bonds, then we might have some sensitivity for Goldman Sachs's many trials (literally and figuratively). Goldman Sachs right now is being barraged from two different sides (shareholders and Ireland's Central Bank) who are seeking recompense for GS's fraudulent or criminal behavior.

But Goldman will only admit to making mistakes as it reaches into its huge pockets and pulls out money for fine after fine; therefore, until some of the executives are criminally prosecuted, we will welcome all those who seek some redress.

Goldman Sachs is described with a plethora of euphemisms that all say "fraud." So at various times Goldman will "fail to manage," "fail to identify," commit "errors in calculations," or fail to adhere to "regulatory requirements."

Continuing, Goldman "misled investors," "unfairly" rewards bank employess, used wasteful compensation methods, performed non-disclosure of information on CDOs and practiced "wrongful conduct."

But really, Goldman committed fraud and deserves the label given it by Goldman Sachs's own Lawyer, Gregory Varallo himself, who used the phrase: A "Vast Criminal Enterprise."

Central Bank fines Goldman Sachs
By Irishtimes

The Central Bank of Ireland has fined Goldman Sachs €160,000 following an investigation into regulatory breaches at the investment bank.

The Central Bank found that the bank failed to manage, monitor and report accurately its regulatory counterparty risk capital requirement during an 18-month period between July 2008 and December 2010.

In addition, the firm's internal control mechanism failed to identify that its regulatory counterparty risk capital requirement was incorrectly calculated, the investigation found.

Goldman Sachs disclosed errors in calculations of the firm's counterparty risk requirement to the Central Bank in December 2010.

In a statement today, the Central Bank said that in deciding the appropriate penalty to impose, it had taken account of the fact that the regulatory capital maintained by the firm during the period was at all times in excess of its capital requirements, and that the bank had co-operated with the investigation from an early stage.

Director of enforcement Peter Oakes said the existence of proper systems and controls to ensure continuous and proper calculation of risk and regulatory capital requirements is essential to the maintenance of stable and properly financed financial service providers. The reliance on automated systems should be tempered by adequate oversight to ensure that systems and controls are comprehensive and proportionate, he added.

"Firms are reminded to monitor and test their internal control systems on a regular basis and should take great care to ensure that any changes to systems are properly and fully tested so that regulatory requirements are adhered to and all regulatory reports provided to the Central Bank are accurate" he said.

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Goldman Sachs's Pay Plan Hurts Shareholders, Lawyer Contends
By Jef Feeley - Bloomberg Businessweek

Sept. 7 (Bloomberg) -- Goldman Sachs Group Inc.’s compensation plan, which almost doubled top executive Lloyd Blankfein’s pay last year, unfairly rewards the investment bank’s employees at shareholders’ expense, a lawyer for investors said.

Goldman Sachs, the fifth-biggest U.S. bank by assets, has lost $50 billion in market value since 1999 while the company has paid out billions in compensation to the firm’s 31,000 employees, including Blankfein, its chairman and chief executive officer, John Harnes, an attorney for investors who have sued over the pay plan, argued today.

Goldman Sachs, based in New York, “is being run for the benefit of employees rather than shareholders,” Harness told Delaware Chancery Court Judge Sam Glasscock III. The judge heard arguments on whether shareholders’ suits seeking to recoup executive compensation should be thrown out and said he’d rule later.

The firm, which set a Wall Street pay record in 2007, was pilloried by politicians and labor unions for its compensation practices after getting taxpayer aid during the financial crisis. In July, Goldman Sachs officials set aside $8.44 billion for the company’s compensation pool in the first six months of this year, according to its website. That was 9 percent less than in the same period in 2010 as revenue tumbled 11 percent.

$19 Million Compensation

Blankfein’s $19 million compensation for 2010, which included a $5.4 million cash bonus, was almost double the prior year’s award even as Goldman Sach’s profits fell. Blankfein and other firm executives agreed to forgo cash bonuses in 2009 and take restricted stock grants as compensation to mute criticism of the firm’s pay practices.

Lawyers for the Southeastern Pennsylvania Transportation Authority, a Goldman Sachs shareholder, argue the firm’s lucrative compensation system is wasteful and rewards employees for taking risks that hurt the firm’s stock price.

Harness noted Goldman officials received billions in pay and bonuses last year while the firm settled claims by the U.S. Securities and Exchange Commission that executives misled investors in collateralized debt obligations linked to subprime mortgages.

The firm agreed to pay $550 million, the largest penalty ever levied by the SEC against a Wall Street firm, to resolve regulators’ claims that marketing materials about the investments had “incomplete information.”

CDOs in 2007

Goldman Sachs created and sold the CDOs in 2007, as the U.S. housing market faltered, without disclosing a hedge fund helped pick the underlying securities and then bet against the investment vehicles, the SEC said in the suit Goldman settled. The bank didn’t admit wrongdoing as part of the accord.

Such “wrongful conduct has cost shareholders billions to date and is likely to cost billions more,” Harnes argued on behalf of Septa. Philadelphia-based Septa is the nation’s fifth- largest public transportation system, according to its website.

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