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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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Monday, September 24, 2012

Another Lawsuit Against Goldman Sachs's "Rainmakers"

Goldman Sachs is not making as much revenue as it is used to so it is reducing the compensation of employees by getting rid of them.  The big "rainmaker," CFO David Viniar who made $15.8 million last year, is one of those leaving because of retirement.

Since 2010, Goldman has cut 3,400 people from its payroll.  Apparently, there are about 100 other "rainmakers" or "highly-paid investment bankers" who are also leaving.

A Rainmaker can also be defined as:

 "One who is believed to be capable of producing rain as through magical or ritual actions."
What are those "magical or ritual actions?"  Well, the indications are that the magic lies in CDOs (synthetic CDOs are the most magical of all!) and CDS.  The ritual should be called fraud.  See what the rainmakers of Goldman Sachs have wrought below:
Richman v. Goldman Sachs Group:  CDOs and Wells Notices
By David Rodman - The Race to the Bottom.org
 . . . .

The court found that Plaintiffs plausibly alleged that Goldman made material omissions regarding its arrangement with Paulson & Co. in the Abacus transaction because Defendants "knowingly allowed Paulson to select the assets for the Abacus CDO, and knew that Paulson was selecting assets that it believed would perform poorly or fail." Similarly, the court found that Plaintiffs plausibly alleged that in the Hudson, Anderson, and Timberwolf I CDO transactions, Goldman represented that it held a long position in the equity tranches and did not disclose its substantial short positions. As the court said:
 "having allegedly affirmatively represented [Goldman] had a particular investment interest in [these synthetic CDOs]—that it was long—in order to be both accurate and complete, Goldman ... had a duty to disclose [it] had a [greater] investment interest [from its] short [position] ... [because that was] a fact that, if disclosed, would significantly alter the ‘total mix’ of available information."
Finding that Plaintiffs established duty, the court turned to the scienter analysis. Scienter could be  inferred when defendants "knew facts or had access to information suggesting that their public statements were not accurate." Here, Defendants allegedly assured shareholders that Goldman complied with the law and that it had "procedures in place to address 'potential conflicts of interest.'" Alternately, Goldman allegedly fostered a conflict of interest in the Abacus CDO and acted against investor interest in Hudson, Anderson and Timberwolf I. The court found that "Goldman knew or should have known that its statements about complying with the letter and spirit of the law, and its disclaimers regarding ‘potential’ conflicts of interest were inaccurate and incomplete." The court agreed with Plaintiffs that a strong inference of scienter could be drawn from Goldman's actions in the four CDO deals.

Read the article here
See the original legal document here

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