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Fraud*
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

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Thursday, March 22, 2012

Goldman Sachs's CDOs Bite Back

Because the government and the Department of Justice prefer not to fully investigate and prosecute the frauds committed by Goldman Sachs, it is incumbent upon individual companies and investors to sue for relief.  Some judges have ruled that such lawsuits are worthy of being brought forward.  Goldman cannot hide behind the mantra that the buyers were "sophisticated."

Judge Victor Marrero has decided that hedge fund Dodona I LLC may pursue its claims against Goldman.  What's amusing is that Goldman itself acted as if it were a hedge fund by selling risky Hudson CDOs to Dodona and then betting against their own instruments!  There should be a law against that practice plus jail time for executives under Sarbanes-Oxley.

Goldman loses bid to end lawsuit over risky CDO
By Jonathan Stempel - Reuters

NEW YORK (Reuters) - Goldman Sachs Group Inc lost its bid to dismiss a lawsuit accusing it of defrauding investors by selling risky debt linked to subprime mortgages that it planned to bet against.
The decision by U.S. District Judge Victor Marrero in New York keeps alive a hedge fund's claims over a $2 billion offering of collateralized debt obligations, amid intense scrutiny over Goldman's activities before and after the 2008 financial crisis.

Marrero said the hedge fund Dodona I LLC may pursue nearly all its claims against Goldman, including that the Wall Street bank recklessly or intentionally sold the Hudson Mezzanine Funding CDOs to offload subprime risk on unsuspecting investors.

"Goldman's sudden -- and prescient -- shift to reducing subprime risk supports the inference that it possessed some unique insight" about the "bittersweet potion" of CDOs it was selling, Marrero wrote in a 64-page decision.

A Goldman spokesman, Michael DuVally, declined to comment. Richard Klapper, a lawyer for the bank and co-defendants Peter Ostrem and Derryl Herrick, who were Goldman structured finance executives, did not immediately return a call seeking comment.

Lawrence Lederer, a lawyer representing Dodona, called Marrero's decision "extremely well-reasoned, measured, and very substantially supported. We are eager to ultimately try the case on behalf of our client and other investors in the Hudson CDOs."

Read the rest of the article here 

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