The Misbehavior of Goldman Sachs

The article below presents two points of view about the way Goldman Sachs operates:  Elliot Weissbluth points out the problems with bank brokerage businesses like Goldman, such as conflicts of interest; and Janet Tavakoli, who has written a book called The New Robber Barons, says that Goldman's bad behavior is well documented.

Goldman Sachs Ripped by Critics for History of Putting Profits Over Clients 
HighTower’s Weissbluth faults bank brokerage business model; derivatives expert Tavakoli says Goldman’s misbehavior well documented
 By Gil Weinreich - AdvisorOne

In a phone interview with AdvisorOne, Tavakoli said Goldman had a history of “using clients to offload risks that they themselves found unacceptable.

“I’ve documented quite a bit of that in my new e-book,” she said, adding that Goldman was a key architect of “overrated and overpriced” CDO transactions whose “risks were not adequately represented to their clients” and “that should never have come to market.” She added that the firm was a huge beneficiary of the AIG bailout, receiving billions of dollars that should have been “clawed back” for its “fraudulent conveyance” of securities. “They should have been investigated not rewarded,” she says.
Tavakoli also faulted Goldman for its response to the Smith letter.

“Many have been vilifying them as morons who flunked statistics and logic by citing a survey by people who are being paid by the firm,” Tavakoli said. “I believe they are merely being disingenuous by crafting a toss-off response to a serious issue.”

 HighTower Advisors’ Weissbluth says Goldman and firms with similar business models claim to offer “synergy” but instead provide “pure conflict” and “layers of profit” at client expense. He cites as an example a broker buying bonds for his client who calls the firm’s fixed-income desk.

Read the full article here