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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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Saturday, September 21, 2013

How Many Corrupt Ways Does Goldman Sachs Make Money? Let's Count the Ways!

Here's a listing of Goldman's prowess as a fraudulent bank brought to you by Matt Taibbi:

Forbes Calls Goldman CEO Holier Than Mother Teresa
By Matt Taibbi - RollingStone
. . . .

Just for yuks, let's fill Binswanger in on some of the ways Goldman has made its money over the years.

This is just the stuff they've been caught for, by the way.

•  Way back in 1999, several eras of corruption ago, Goldman serially engaged in manipulation of the IPO markets, including illegal tactics like "spinning" and "laddering," where insiders and top bank clients would be allowed to buy shares in new companies at severely discounted prices, sometimes in return for investment banking business or for promises that those insiders would jump back into the bidding later to jack up the price artificially. In a famous case involving eToys, Goldman paid a $7.5 million settlement for allowing insiders to buy shares at $20, far below the $75 shares the company traded on opening day. The secret discounts might have cost the company hundreds of millions of dollars. The firm went bankrupt in short order, by the way.

•  In the infamous "Abacus" case, Goldman teamed up with a hedge-fund billionaire named John Paulson to create a born-to-lose portfolio of mortgage derviatives, which were then marketed by Goldman to a pair of sucker European banks, IKB and ABN-Amro. When the instruments crashed, Paulson made bank on bets he made against his own loser portfolio. Goldman's peculiar role was in "renting the platform," i.e. allowing IKB and ABN-Amro to think that neutral Goldman, not a hedge funder like Paulson massively betting against the product, had created the portfolio. Goldman only made $15 million in the deal that ended up causing over a billion in losses, meaning this wasn't even just about money – they were just trying to curry favor with a hedge fund client out to screw a bunch of Euros.  They were fined $550 million.

•  In the even more absurd Hudson deal, Goldman unloaded a billion-plus sized chunk of toxic mortgage-backed crap on Morgan Stanley during a time when Lloyd "Mother Teresa" Blankfein was telling his minions to unload as much of the firm's 'cats and dogs' as possible, ie. its soon-to-explode subprime holdings. In its marketing materials, Goldman represented to Morgan Stanley that its interests were aligned with Morgan, because Goldman owned a $6 million slice of the Hudson deal. It didn't disclose that it had a $2 billion bet against it. Morgan Stanley, which was subsequently bailed out by taxpayers like Harry Binswanger, lost $960 million.

•  Goldman bought a series of aluminum warehouses and has apparently been serially delaying the delivery of aluminum in order to artificially inflate the price. Even Binswanger might have heard of this one. The CFTC sent a wave of subpoenas on this score just last month.

•  Goldman paid a fine to the SEC in 2010 after it was caught breaking rules governing short-selling on at least 385 occasions – it is currently embroiled in numerous lawsuits that similarly allege that Goldman has engaged in widespread "naked" short selling, a kind of stock counterfeiting that artificially depresses the prices of companies by flooding the market with phantom shares.

•  Earlier this year, Goldman and Chase agreed to pay a combined $557 million to settle government claims that the banks and/or their mortgage servicing arms engaged in wholesale abuses in the real estate markets, including (but not limited to) robosigning, the practice of mass-producing fictitious, perjured affidavits for the courts for the purposes of foreclosing on homeowners.

•  A VP in Goldman's Boston office was nabbed making improper contributions to the former state Treasurer in Massachusetts, during a time when Goldman was underwriting $9 billion in state bonds. Goldman paid a $14.4 million fine in the pay-for-play scandal.

•  In what one former SEC official described to me as "an open-and-shut case of anticompetitive behavior," Goldman took a $3 million payment from J.P. Morgan Chase to bow out of the bidding for a toxic interest rate swap deal Chase wanted to stick to the citizens of Jefferson County, Alabama. Goldman got the payment, a Chase banker joked, "for taking no risk." Chase ended up funneling money to the County Commissioner, who signed off on a deadly deal that put the citizens of the Birmingham, Alabama area into billions of debt (and ultimately bankruptcy), in what is still considered the largest regional financial disaster in American history.

•  In 2009, a Goldman programmer named Sergey Aleynikov left his office in possession of a code that contained Goldman's high-frequency trading algorithms. Goldman promptly called the FBI – which up until that point had done exactly zero to prevent crime on Wall Street – to help Mother Teresa's bank recapture its valuable trading code. In court, a federal prosecutor admitted that the code Aleynikov had in his possession could, "in the wrong hands," be used to manipulate markets. Aleynikov just pulled an eight-year sentence. Goldman, incidentally, has gone entire quarters without posting a single day of trading loss – in Q1 2010, the bank made at least $25 million every single day, somehow never once betting wrong in 63 trading days. Imagine that! What foresight! What skill! One can see how Mr. Binswanger could believe that the bank's CEO should be exempt from income taxes.
I could go on – Goldman has been wrapped up in virtually every kind of scandal known to investment banking (and even more that they invented) and was recently at the center of a mysterious and near-catastrophic computer-trading disaster that could have caused massive social damage (more on that in a column coming soon).
Read the whole article here

2 COMMENTS:

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