What Is Goldman Sachs Really Like?

First, Goldman Sachs has paid its latest fine for RMBS fraud to Stichting Pensioenfonds ABP and according to the Bloomberg's article:

"ABP sued New York-based Goldman Sachs in New York State Supreme Court in January 2012. The company alleged that it purchased certain mortgage-backed securities in reliance on false and misleading statements and that the securities were riskier than had been represented, backed by mortgage loans worth significantly less than had been represented."

. . . . . . . . . . . . . . . . .

Second, Professor Jeffrey Sachs calls the banks what they really are in an audio/video recoding posted at  Market-Ticker.  He is talking by telephone to a conference of academics discussing ending the fractional reserve lending system in order to repair the financial system by taking liquidity away from bankers who treat their banks as casinos for gambling.  He calls the bankers cynical and full of conflicts of interest.  Here is  a partial transcript of what he thinks the banking system is:

"Prima facie, [it is] criminal behavior.  It's financial fraud on a very large [scale]; there's a tremendous amount of insider trading....  [John] "Paulson worked together with Goldman Sachs to defraud massively many European banks which bought the toxic mortgages that Paulson had put together....  Goldman ended up paying a small fine and the chair of Goldman, of course, continued in his position and continued [to attend] White house State dinners."

Other descriptors that Sachs uses for bankers and banking include:

"lawlessness," "collapse of decency," "a lot of them are crooks," "nefarious behavior,"

Goldman Sachs should not be a commercial banking unit.  That [it is] is sad.

The banking system is dysfunctional;  there is a crisis of values that is extremely deep.  Legal structures and regulators need reform.  "I regard the moral environment of Wall Street people as pathological."  They bear no responsibility to others;  they are tough, greedy, aggressive and out of control and have "gamed the system."  Regulators and the White House remain docile.  Politics is corrupt to the core.

Please view and hear the video here

Goldman Sachs Faces Another Lawsuit

Goldman Sachs may be gearing up to debunk Greg Smith's critical book about his experiences at Goldman but, nevertheless, he has some truths to say about how Goldman works.  The one very noticeable attribute for both the protagonist and the antagonist is that each of their analyses of success/failure revolves around money--money accrued and money spent.  It's always about the money.

So let us move on to the latest thing we know that Goldman has going against it--another lawsuit.

The suit involves $1.07 billion against Goldman's Timberwolf securities filed by Basis Capital, a hedge fund:

Goldman loses bid to end lawsuit by hedge fund over CDO
By Karen Freifeld - Reuters
. . . .
We're very pleased the court agrees with us that Goldman needs to answer for its conduct," said Washington, D.C., attorney Bruce Grace, a partner in Lewis Baach, who represents the fund.

Goldman's CDO practices have drawn regulatory scrutiny. In April 2010, Goldman agreed to pay $550 million to settle U.S. Securities and Exchange Commission charges that it sold the risky Abacus 2007-AC1 CDO while letting hedge fund billionaire John Paulson bet against it. The bank did not admit wrongdoing.

Basis Yield Alpha Fund is seeking to recoup $67 million of losses plus $1 billion of punitive damages from transactions known as Timberlake [sic] and Point Pleasant. Basis Yield was managed by Sydney-based Basis Capital Funds Management Ltd.

Read the entire article here

Goldman Sachs Sued For Fraud--Again!

Maybe Goldman Sachs judges its success by how many lawsuits it faces each year.  How can any self-respecting bank raise its head in pride whilst dealing with so many suits regarding its fraudulent ways?   (See here, here, here,  here and here.)

Citigroup, Goldman, UBS Sued Over Mortgage-Backed Bonds
By David McLaughlin - Bloomberg


Citigroup Inc. (C), Goldman Sachs Group Inc. (GS) and UBS AG (UBSN) were sued separately in New York over losses on $368.7 million in mortgage-backed securities.

The three banks made “material misrepresentations” about the loans backing the securities and about the transfer of the loans into trusts, according to filings today in New York State Supreme Court.

IKB Deutsche Industriebank AG (IKB) sued Citigroup over losses on $137.4 million in mortgage securities and also sued Goldman Sachs over $73.2 million in securities. IKB, a German lender, said it sold the securities at a loss.

UBS, based in Zurich, was sued by Sealink Funding Ltd. over $158.1 million in bonds. The securities at issue in the UBS case are either held by Sealink or were previously sold at a loss, according to court papers.

Claims against Citigroup, Goldman Sachs and UBS include fraud and negligent misrepresentation, according to the filings. 

Read the whole article here

Goldman Sachs Knows How to Profit from Its Conflicts of Interest

Here's another article about how Goldman Sachs uses conflicts of interest to feather its own nest.  Goldman advised Amerigroup, a health insurer, to accept an offer by WellPoint to acquire the company.  The shareholders who sued allege Goldman discouraged an offer by another company that might have been better for the shareholders but which benefited Goldman for sure.

Shareholders sue insurer Amerigroup
By Jeff Mordock - The Legal Intelligencer (Post-Gazette) 
. . . .
 
The plaintiffs allege that Goldman was "hopelessly conflicted" on the transaction because under its agreement with Amerigroup it would receive $233.7 million if the company were sold prior to Aug. 13.

Amerigroup is the 22nd-largest health insurer in the U.S., by premiums collected, according to the National Association of Health Insurers. WellPoint is the second-largest.

The shareholders -- the City of Monroe Employees Retirement System and the Louisiana Municipal Police Employees Retirement System -- filed the lawsuit Aug. 16 in the Delaware Court of Chancery. In addition to Amerigroup -- which is headquartered in Virginia Beach, Va., and incorporated in Delaware -- Goldman Sachs, WellPoint and a subsidiary created for the merger were all named as defendants. Several of Amerigroup's directors were also named as defendants, including Thomas E. Capps, James G. Carlson and Jeffrey B. Child.

Read the whole piece here

Goldman Sachs's Business Model is "against the law"

It is admirable when individuals like Jacob Zamansky have no fears when it comes to a lawsuit against Goldman Sachs's illegal behavior. Mr. Zamansky is a "defender of the little guy" and is helping with a class-action lawsuit on behalf of shareholders of the infamous Abacus deal.

It would have been more wonderful, however, if the Department of Justice was as fearless and as concerned with the individual investor who lost the savings, pensions or mortgages because of Goldman Sachs's actions. It is not just the shareholders who lost big-time when Goldman Sachs let loose its greed molecules!

Goldman Sachs targeted as 'Jaws' joins battle over banking crash
By Paul Harris - The Observer (Guardian)

Adrift in a sea of lawsuits as shareholders sue for millions, the bank is a soft target for mocking critics

He is known as "Jaws", the perfect nickname for a lawyer entangled in a lawsuit filed against a massive investment bank that has been dubbed a "vampire squid" by its critics. But Jacob Zamansky, a renowned Wall Street defender of the little guy, with a record of extracting large settlements from giant firms, does not fear the tough reputation of Goldman Sachs.

Indeed, he is happy to be helping on a class-action lawsuit against the bank taken out on behalf of a group of shareholders seeking millions of dollars in damages for alleged illegal behaviour. "Goldman misled these investors. So they came to me," Zamansky said.

However, Zamansky's lawsuit is just one of a swarm of legal problems that surround Goldman, whose name once typified blue-blooded banker wealth but now attracts a legion of critics who see it as a byword for out-of-control greed.

. . . .

This is where suits such as Zamansky's come in. The class action is grouping together a number of shareholders who say the firm's activities around one now notorious security, known as Abacus, have caused them massive losses. But Zamansky says the issue has a wider symbolism for a nation with a moribund economy that many people blame on the actions of big banks. "This gets to the core of the crisis … their business model was against the law," said Zamansky.

Goldman is fiercely contesting the claims and has repeatedly said it did nothing wrong. But what might really worry its top executives is not the rising tide of private lawsuits but the possibility that the US department of justice may be laying criminal charges. The firm was hit with a subpoena in June, asking for documents related to the mortgage security industry and other topics. That follows on from Goldman's starring role – along with other major banks – in a Senate report that detailed numerous examples of bad behaviour as it sought to investigate the origins of the financial crisis. The report found many banks guilty of privately trash-talking the mortgage debt they were happily selling. There have also been allegations, robustly denied by Goldman, that Blankfein may have perjured himself during testimony to the Senate.

The market's sensitivity to the issue was shown by the dramatic fall in Goldman's share price when news broke that Blankfein had hired Weingarten. Indeed, in the space of a few hours more than $2.5bn was wiped off the firm's market value as traders digested the news, although the price later recovered. The instant reaction is perhaps partly explained by looking at some of Weingarten's previous clients, who include executives involved in scandals like Tyco and Enron.

However, Goldman insisted that Weingarten's appointment was routine – and some observers agree. "It was not big news," said Columbia University law professor John Coffee.

Others were less sure. They pointed to the fact that Weingarten is best known for his work as a defence lawyer in white-collar criminal cases and in some ways was an unusual choice for Blankfein if he was not expecting trouble. They also point to Weingarten's close ties to the department of justice, where he has previously worked in its public integrity section.

Whatever happens legally, Goldman's supporters will take heart from the fact that other top banking figures who played key roles during the financial crisis – such as Lehman head Dick Fuld and John Thain of Merrill Lynch – also hired their own lawyers, but have yet to face any criminal charges.

What is more clear is the intense damage done to Goldman's reputation in the years since the crisis. Even as the bank's bottom line has recovered and it has resumed paying out handsome bonuses worth billions of dollars to its staff, it still has a huge image problem. "Their image has been greatly tarnished. They were the best and the brightest, but all that has been called into question," said Zamansky.

Read the entire article here

Goldman Sachs Sued By Citizens

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A California couple, Nancy and Derek Casady, are suing A.I.G., Goldman Sachs and Deutsche Bank over two federal loans.

We all talk about the fraud on Wall Street, The Federal Reserve and even many of our politicians.  But all we do is talk - present company included.  But here are a couple of citizens who stopped talking and took action to back up their beliefs.  My hat's off to them.

In a story reported in the New York Times on line edition (NYT.com) - Claiming Fraud in A.I.G. Bailout, Whistle-Blower Lawsuit Names 3 Companies by MARY WILLIAMS WALSH - a California couple, Nancy and Derek Casady, are suing A.I.G., Goldman Sachs and Deutsche Bank.  This is a story worthy of repeating.

The first known whistle-blower lawsuit to assert that the taxpayers were defrauded when the federal government bailed out the American International Group was unsealed on Friday, joining a number of suits seeking to settle the score on losses related to the financial crisis of 2008. 

The lawsuit, filed by a pair of veteran political activists from the La Jolla area of San Diego, asserts that A.I.G. and two large banks engaged in a variety of fraudulent and speculative transactions, running up losses well into the billions of dollars. Then the three institutions persuaded the Federal Reserve Bank of New York to bail them out by giving A.I.G. two rescue loans, which were used to unwind hundreds of failed trades.
The loans were improper, the lawsuit says, because the Fed made them without getting a pledge of high-quality collateral from A.I.G., as required by law.

 Fraud, as the definition at the top of the page says, is an illegal activity.  In my way of thinking, an illegal activity is against the law and anything done that is against the law is punishable by law.  That is of course, if those charged with upholding our laws act according to their delegated duties and responsibilities.


Indeed. those charged with the responsibility do not discharge their duties "according to the law" then they themselves may be operating illegally and should be subject to punishment themselves.


The evidence of fraudulent activities by Goldman, A.I.G., Deutsche Band and all the other bands of merry banksters has been brought to the forefront for over three years now yet nothing meaningful has ever been done.  While I also believe in the basic rule of law that everyone is presumed innocent until proven guilty, the concept of prosecuting a criminal case where there is sufficient evidence to do so, is also a duty our justice system must employ.

“To cover losses of those engaged in fraudulent financial transactions (emphasis added) is an authority not yet given to the Fed board,” said the plaintiffs, Derek and Nancy Casady, in their complaint, filed in Federal District Court for the Southern District of California.

"Fraudulent financial transactions...." evidence of which we have seen, heard and read about for years.  There should be sufficient evidence to take action.

Senior Fed officials have stated repeatedly that they had to take unusual steps in 2008 because the global financial system was close to breaking down. The Casadys’ lawyer, Michael J. Aguirre, argued that even so, the Fed was required to comply with its own governing statutes. He said that when the Fed bailed out a nonbank, it was required to secure the loan with the same liquid, high-quality collateral it required when lending to a troubled bank.

While the Fed was not named as a defendant in the law suit, this above the law, privately held and secretive  company has much to answer for as well.  Perhaps this law suit will bring out the seemingly illegal actions they took and open the door to not only audit them but to investigate them as well.  We need to take a closer look at those in charge like Timothy Geithner and his actions while President of The New York Federal Reserve Bank.  We need to take a closer look at the actions of Henry Paulson, former CEO of Goldman Sachs while he was Secretary of the Treasury during this financial crisis.  Both men seemingly condoned the actions of these financial institutions who caused our Great Recession and aided and abetted their actions using taxpayer money to coverup their schemes and possible fraudulent activities.

A spokesman for A.I.G., Mark Herr, said the Casadys’ lawsuit was “devoid of merit” and said Mr. Aguirre appeared to be recycling old and discredited legal theories.

Not a surprising comment from A.I.G. who was one of the major beneficiaries of all of these questionable activities.

Not surprising either is the following comment:

A spokesman for Goldman Sachs said he was not familiar with the Casadys’ lawsuit and could not comment on it. A spokeswoman for Deutsche Bank declined to comment.

The basis of the law suit is explained as follows.

The Casadys’ lawsuit says the resulting law needs judicial review because it went flying through Congress with little debate and now appears to be feeding high-risk behavior. Investors in nonbanks now expect that the Fed will open a safety net to catch them, should they falter, the suit contends.


“Congress did not show a legislative intent to convert the Federal Reserve into a bank for bailing out failed speculators,” the complaint asserts.

Our country needs more people like the Casaday's.  We all need to rally behind them in their quest for justice.

Read the full article...click here

Related articles

• First Goldman, Then Deutsche Bank... Is The U.S. Government Just Going To Go Down The Line? (GS, DB, JPM) (businessinsider.com)
• Deutsche Bank been sued for mortgage fraud (thepressnet.com)
• DOJ, SEC to Investigate If Goldman Swindled Clients (foxbusiness.com)
• Fed Data: Goldman Sachs Borrowed From Discount Window 5 Times, Despite Bank Claims (huffingtonpost.com)
• Goldman Sachs faces contentious AGM (guardian.co.uk)
• Nuns put Goldman Sachs on spot on execs' pay (washingtontimes.com)

Maybe All Those Toxic Assets That Goldman Sachs Sold are Coming Home to Roost!

Just when a person thinks that there are some insitutions that have more sense than your average Goldman Sachs bank, she finds out that even credit unions (that are not generally known as predatory firms) also were taken in by the golden-tongued Goldman Sachs.

Credit Unions are "not-for-profit cooperative institutions" where the owners and users are the same people (and the top officers do not have million dollar bonuses!) Credit Unions are more democratic than banks because the owners and users are the same people and the board is democratically elected by the members. Corporate credit unions provide services to individual credit unions.

So it is galling when we find that credit unions were also duped by Goldman Sachs who were pushing CDOs to all and sundry. As Felix Salmon (Reuters) suggests, we need more than a few individual insitutions each making a separate suit against Goldman Sachs who is quite comfortable in paying a penalty to each case separately. What is needed is a government sponsored suit that takes all those toxic CDOs into account and pushes for criminal prosecutions for all of them. Will that happen?

Below are two opinions regarding the possible suit of Credit Unions:

Bruce Krasting in Wall Street Pit in an article called "Credit Unions Want Their Money Back" states:

. . . .

Credit Unions go for blood

Interesting article at the WSJ this morning re Credit Unions. It would appear that a law suit is about to get filed against the big banks (again). Five of the nation’s biggest credit unions had their balance sheets polluted with crap CDOs. Now they want their money back. From the article:

The National Credit Union Administration, or NCUA, has threatened to sue several investment banks unless they refund over $50 billion of mortgage-backed securities sold to the five institutions, called wholesale credit unions.

The names involved?

The NCUA is accusing Goldman Sachs Group Inc., Bank of America Corp.’s Merrill LynchCitigroup Inc unit, . and J.P. Morgan Chase & Co. of misrepresenting the risks of the bonds to wholesale credit unions.

Surprised? I’m not. Goldman Sachs has commented on the pending litigation:

Goldman said the NCUA “has stated that it intends to pursue…on behalf of certain credit unions for which it acts as conservator” claims that offering documents for certain securities Goldman sold “contained untrue statements of material facts and material omissions .”

Untrue statements of material facts?? Material omissions?? I’m shocked!

Watch this case as it evolves. This may set an interesting precedent. It could very well backfire on the US Treasury Department. Way back in the spring of 2008 our good friend Hank Paulson (and former T.Sec.) forced Fannie Mae to issue a $1 billion + Preferred Stock offering. Fannie of course went bust less than six months later. The offering document on this deal was littered with material omissions and misstatements of facts. But this deal was pushed out to the public by the Treasury Secretary. All the big banks (led by Merrill) sold this swill to the public.

If the NCAU wins its fight with the banks, the lawsuit against Treasury re the garbage Fannie pref is assured.

Read the full article here

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The government's narrow bank suits
by Felix Salmon - Reuters

Liz Rappaport reports that the NCUA is getting tough with Goldman Sachs and other banks which sold corporate credit unions billions of dollars of toxic mortgage-backed securities:

In one of the broadest accusations that Wall Street helped cripple financial institutions during the crisis, the National Credit Union Administration, or NCUA, has threatened to sue several investment banks unless they refund over $50 billion of mortgage-backed securities sold to the five institutions, called wholesale credit unions…

Regulators seized the five wholesale credit unions in 2009 and 2010, inheriting a pile of battered bonds now worth only about $25 billion, or half of their face value.

This seems to me to be yet another form of weird selfishness on behalf of regulators who should really have the national interest, rather than their own self-interest, at heart. The FDIC’s suing WaMu directors? Yes, because the FDIC suffered losses. The NCUA’s threatening to sue Goldman? Yes, because the NCUA suffered losses. But what we’re not seeing here is any kind of government action against these banks which draws the logical conclusion: if Goldman needs to buy back all the bonds it sold to WesCorp, shouldn’t it also have to buy back all the identical bonds it sold to other investors?

What’s happening here is that Goldman is fighting a number of substantially identical claims on a case-by-case basis. Here’s its SEC filing:

Various alleged purchasers of, and counterparties involved in transactions relating to, mortgage pass-through certificates, CDOs and other mortgage-related products (including the Federal Home Loan Banks of Seattle, Chicago and Indianapolis, the Charles Schwab Corporation, Cambridge Place Investment Management Inc., Basis Yield Alpha Fund (Master) and Landesbank Baden-Württemberg, among others) have filed complaints in state and federal court against firm affiliates, generally alleging that the offering documents for the securities that they purchased contained untrue statements of material facts and material omissions and generally seeking rescission and damages. Certain of these complaints also name other firms as defendants. Additionally, the National Credit Union Administration (NCUA) has stated that it intends to pursue similar claims on behalf of certain credit unions for which it acts as conservator, and the firm and the NCUA have entered into an agreement tolling the relevant statutes of limitation. A number of other entities have threatened to assert claims against the firm in connection with various mortgage-related offerings, and the firm has entered into agreements with a number of these entities to toll the relevant statute of limitations. The firm estimates, based on currently available information, that the aggregate cumulative losses experienced by the plaintiffs with respect to the securities at issue in active cases brought against the firm where purchasers are seeking rescission of mortgage-related securities was approximately $457 million as of December 2010. This amount was calculated as the aggregate amount by which the initial purchase price for the securities allegedly purchased by the plaintiffs exceeds the estimated December 2010 value of those securities. This estimate does not include the potential NCUA claims or any claims by other purchasers in the same or other mortgage-related offerings that have not actually brought claims against the firm.

We’re given no indication, here, of the total amount of these bonds which was sold by Goldman: instead, we’re given the fraction of the bonds which are actually being litigated. And since the NCUA hasn’t filed suit (yet), that number is relatively small — less than half a billion dollars.

So long as government-run entities like the Federal Home Loan Banks and the NCUA look out only for their own self-interest here, both they and Goldman have every incentive to settle these suits out of court. But the government is meant to have a broader interest than that. Let’s say I bought one of these bonds but don’t have access to the government’s expensive lawyers. Why is it fair that the government should get Goldman’s money in an out-of-court settlement while I get nothing?

Yes, there are class actions pending against Goldman too, or at least putative class actions — they don’t seem to have been certified yet. But those class actions don’t have the extra force that comes from being brought by the government. If the government really believes that Goldman et al did something seriously wrong here, they should come down on those banks on behalf of all the victims. Not just the state-owned ones.

Read the article here

Goldman Sachs's Monetary "Settlements" are Unsettling

Why would anyone trust a bank such as Goldman Sachs when it is continuously being sued for fraud or malfeasance or whatever? Most people would not be bothered to deal with a bank that pushes the laws to the limit in its financial undertakings. It is hard to understand how Goldman Sachs can be proud of its record when it is being sued, accused of fraud, found guilty of creating and selling toxic assets to others while profiting itself, pushing the limits of the law in its dealings, lobbying both parties to pass laws deregulating banking rules and supplying the government with its own people who appear to run public finances for the benefit of the banks rather than the public.

When banks like Goldman Sachs, who make billions and billions of dollars each year, are "punished" by paying mere millions in compensation, Goldman Sachs treats such settlements as merely the "cost of doing business."

There are banks that exist that are honest, careful with their risks and free from fraud and malfeasance. Why don't we see the demise of the Goldman Sachs and the rise of honest banks? When the question of honest banks was raised by a blogger, the answer was to use a credit union or a local commercial bank.

So, for this posting, here is a reprise of one of the latest of Goldman Sachs's failings:

State of Michign settles with Goldman Sachs

Goldman Sachs gives Michigan investors access to $32 million in capital, pays state over $90,000 by Margaret Lucas Agium - Detroit Legal News Examiner

The State of Michigan has reached an Auction Rate Securities (ARS) settlement with Goldman, Sachs and Co., the Office of Financial and Insurance Regulation (OFIR) reported Thursday. The settlement requires Goldman Sachs to offer full buybacks of up to approximately $32 million to any eligible Michigan customer who purchased an ARS from the brokerage firm.

The settlement also requires the brokerage firm to make a settlement payment of approximately $91,000 of which it deposited 90 percent immediately into the State of Michigan’s general fund, as required by law. The 10 percent went into OFIR’s Michigan Investor Protection Trust.

The settlement with Goldman Sachs is in addition to previous settlements with Banc of America, Citigroup, Comerica, Deutsche Bank, JPMorgan, Merrill Lynch, Morgan Stanley, RBC Capital Markets, Stifel Nicolaus, UBS and Wachovia. In total, OFIR settlements have resulted in offers for full buybacks of more than $4.37 billion to Michigan consumers and settlement payments of more than $9.5 million to the State of Michigan.

Continue reading on Examiner.com here

Goldman Sachs Loses in Arbitration Case

Goldman Sachs now has a chance to prove that it cares about its clients at least as much as it cares about itself.

Goldman Fails to Vacate $20.1 Million Bayou Award
by Edward Pettersson - Bloomberg

Goldman Sachs Group Inc. failed to vacate a $20.1 million award an arbitration panel had granted Bayou Group LLC creditors who sued Goldman for failing to detect Bayou funds for which it did transfers were a fraud.

U.S. District Judge Jed Rakoff in Manhattan said in a ruling today that Goldman failed to show that the arbitration panel had “manifestly disregarded the law” in granting the award.

The creditors group sued Goldman in 2008 after Bayou Group executives pleaded guilty to running a Ponzi scheme and the company’s hedge funds went into bankruptcy. The creditors alleged Goldman failed to diligently investigate the funds and was liable for fraudulent transfers. The arbitration panel awarded the creditors the full $20.1 million they sought.

Ed Canaday, a Goldman spokesman, declined to comment on Rakoff’s ruling.

The case is Goldman Sachs Execution & Clearing LP v. the Official Unsecured Creditors Committee of Bayou Group, 10-05622, U.S. District Court, Southern District of New York (Manhattan.)

Read the article here

Goldman Sachs Pays Out More Small Change

Whether Goldman Sachs has to act either "dumb and foolish" or "smart and sleazy" as William Cohen says, they have been caught again using dirty tricks to make money. Mind you, the penalty paid by GS is small change. Too bad that there wasn't a law stating, "three strikes and you are in jail" for these continuing offenses.

Kansas reaches $800K Settlement with Goldman Sachs

Wichita Business Journal - by Daniel McCoy

The office of Kansas’ securities commissioner, Marc Wilson, announced Friday that the state has reached an $800,000 settlement with Goldman, Sachs & Co.

The settlement was in conjunction with an auction rate securities investigation, based on claims the firm misled Kansas investors about auction rate securities.

“This settlement sends a strong message to Goldman Sachs and other Wall Street firms that Kansas investors demand integrity from securities dealers,” Wilson said in a news release. “Full and truthful disclosure is a cornerstone without which markets cannot function. If firms do not meet these high standards, we will take action on behalf of Kansas investors.”

Goldman Sachs is one of the ownership entities behind Hawker Beechcraft Corp. in Wichita. Hawker was acquired by GS Capital Partners, an affiliate of Goldman Sachs and Onex Partners in 2007 for $3.3 billion.

The state’s press release about the settlement, along with settlement totals from 11 other similar cases dating back to June 2009, can be seen here.

Read the article here

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Below is an excerpt from the

Kansas Office of the Securities Commissioner, ...Marc S. Wilson, Commissioner...

Kansas Securities Commissioner reaches settlement agreement with Goldman, Sachs & Co., Other Wall Street Giants

For immediate release
October 29, 2010...

. . . .

“This settlement sends a strong message to Goldman Sachs and other Wall Street firms that Kansas investors demand integrity from securities dealers,” said the Commissioner. “Full and truthful disclosure is a cornerstone without which markets cannot function. If firms do not meet these high standards, we will take action on behalf of Kansas investors.”

During the investigation, regulators discovered that the firm’s securities dealers failed to adequately inform customers and train employees on the risks associated with purchasing ARS. Although marketed and sold to investors as safe, liquid and cash-like investments, ARS are actually long-term investments. They are subject to a complex auction process that failed in early 2008 when the firms marketing ARS stopped providing liquidity to the market. Investors not only saw lower returns, but they were also unable to access their money for current needs.

“At critical times, Kansas investors and small businesses were not able to access their own money, and that is completely unacceptable,” said the Commissioner. “It is our hope these things never happen, but when abuses like this occur our job is to be the advocate for Kansas investors and level the playing field.”

The settlement also obligates Goldman Sachs to other remediation for investors. The fine paid by the firm will be placed in the Kansas Investor Education Fund. The fund gives grants to organizations which provide fraud prevention and financial literacy services and otherwise helps KSC carry out its investor education legislative mandate.

The Office of the Kansas Securities Commissioner has also reached settlement agreements with 11 other firms in similar cases, with fines totaling more than $5.9 million. These previous settlements made their way to the State General Fund.

The settlements were negotiated by multi-state task forces of state securities regulators under the auspices of the North American Securities Administrators Association (NASAA). . . .

Read the full report here

Protecting Goldman Sachs's Dirty Little Secrets

If all hedge funds and investment banks played by the same rules, there would be no need to protect banks that have secrets. The idea that a bank that has siphoned billions of dollars from pensions, savings and homeowners over the past years can be "re-victimized" is a ludicrous notion. Goldman is not a victim and never has been. Let's have a level playing field, Goldman Sachs!

U.S. asks to seal courtroom to guard Goldman secrets

By Jonathan Stempel - Reuters

NEW YORK | Wed Oct 27, 2010

NEW YORK (Reuters) - Prosecutors asked a federal judge to seal the courtroom for part of the upcoming criminal trial of a former Goldman Sachs Group Inc computer programer, an effort to protect the secrecy of the bank's high-frequency trading platform.

Prosecutors said in a court filing that there is a "compelling interest in favor of privacy" for Goldman in the trial of the former employee, Sergey Aleynikov.

They cited a federal law to protect owners of trade secrets and a desire not to cause the investment bank to be "re-victimized" through the release of confidential, proprietary trading secrets.

"Any public disclosure of a trade secret poses the substantial risk that the trade secret's value to its owner will be significantly diminished, if not destroyed outright," Assistant U.S. Attorney Joseph Facciponti wrote.

Aleynikov is accused of stealing Goldman's computer code. He is set to go on trial on November 29 in U.S. District Court in Manhattan on two charges alleging theft of trade secrets and transportation of stolen property in interstate commerce.

A third charge alleging unauthorized computer access was dismissed last month. Aleynikov has pleaded not guilty.

Goldman did not immediately return a call seeking comment.

The Wall Street Journal earlier reported the request to seal the Manhattan federal courtroom.

It is common for parties to request the closure of courtrooms when proprietary secrets or sensitive information might otherwise be disclosed publicly.

Aleynikov is accused of improperly downloading Goldman code to an outside server on June 5, 2009, his last day working at the company.

The government contends he later took a laptop containing code and another storage device to his new employer, Teza Technologies LLC, a high-frequency trading start-up in Chicago.

Aleynikov was arrested at Newark Liberty International Airport on July 3, 2009. Teza later suspended him.

The defense has been seeking access to Goldman's trading system, including source code.

In a separate Monday filing, defense lawyer Kevin Marino said this access is necessary to help Aleynikov show "the materials he is alleged to have stolen do not constitute a trade secret, and he did not and could not have intended to injure Goldman by taking those materials."

Aleynikov was 40 at the time of his February 2010 indictment.

Read the article here

Goldman Sachs and "Jargon and Double Talk"

Here we go again! Goldman Sachs Group and Blackstone Group are caught up in new shenanigans. These groups bought health insurance companies which used "unfair competition and false advertising" in order to defraud consumers. These charges certainly do not help to polish GS's image. Goldman has a long way to go to rehabilitate its image from its purely greedy one to one of fair play. At this rate, it may never happen.

Health Insurance Scam Alleged in California

By TIM HULL- Courthouse News Service

LOS ANGELES (CN) - The HealthMarkets group of insurance companies uses deceptive and illegal methods to sell "junk insurance," hiding their policies' many "exclusions and limitations" behind jargon and double-talk, leaving sick policyholders without coverage, the Los Angeles City Attorney's Office says. Prosecutors say co-defendants the Blackstone Group and Goldman Sachs bought the companies knowing that they "sell junk insurance products by whatever means it took."
Prosecutors say the companies actually train their agents to use "impressive sounding but meaningless jargon."
The People of California sued Texas-based HealthMarkets Inc. and its affiliates in Superior Court, alleging unfair competition and false advertising.
"For more than a decade, the HealthMarkets defendants have engaged in a scheme to defraud consumers, including California consumers, through the sale of 'junk insurance' - individual, family and small group health insurance coverage that is marketed as comprehensive insurance but, because of hidden or obscure exclusions and limitations, leaves policyholders without coverage when they need it most," the complaint states.
The city attorney also sued the Blackstone Group and Goldman Sachs Group, which purchased control of the insurance companies in 2006 and have since "ratified the HealthMarkets defendants' fraudulent conduct and have permitted that conduct to continue to the present day," according to the complaint.
The insurers have a sales force of 1,200, who are encouraged to do "whatever it takes" to make a sale, and are trained to "reveal as little information as possible" about policies and to respond to questions "with impressive sounding but meaningless jargon," the complaint states.
Agents "routinely misrepresent to prospective policyholders that the policy they are considering purchasing will pay most of the costs associated with major illnesses and medical events, such as cancer, heart disease and pregnancy," the complaint states. But "in fact, policyholders are often left to pay all or most of large medical claims that they had been falsely lead to believe would be covered by their policy."
Among the HealthMarkets affiliates named defendants are three nonprofits: the National Association for the Self-Employed, the Alliance For Affordable Services, and Americans For Financial Security Inc., all of Texas.
They all are HealthMarkets alter-egos, but are held out as independent to attract customers, prosecutors say. But "in reality ... [they] are affiliated with and have been acting in concert with the HealthMarkets Defendants in furtherance of the scheme to defraud consumers."
Also sued are HealthMarkets affiliates Mega Life and Health Insurance Company of Oklahoma, and the Mid-West National Life Insurance Company of Tennessee.
The Blackstone Group and the Goldman Sachs Group bought control of HealthMarkets and its affiliates in 2006 for $850 million, knowing full well how the insurance companies operated, the prosecutors say.
"Blackstone and Goldman are investment banking institutions that would never have invested $850 million in a company without first diligently researching its operations and revenue sources," according to the complaint. "But even a basic Google search in 2006 would have revealed that the only 'powerful competitive advantage' they stood to gain from acquiring UICI was a sales force eager to sell junk insurance products by whatever means it took."
Prosecutors want the defendants fined $2,500 for each violation of state law, and enjoined from doing business in this manner.

The article is found here

Goldman Sachs Men Are Slow Learners

According to the article below, the present sex discrimination suit is not the first case to be brought against Goldman Sachs (see para 3). They have a history of discrimination going back before 1989. They were sued for discrimination in 1993, 1997, 1999, 2000, 2004, 2007, 2008 and 2010. They don't seem to have learned much or at all. Why would we imagine that they could learn anything about their unethical behavior manipulating the stock market and accumulating great wealth for themselves while decimating the hard-earned savings and pensions of others?

Guest Post from Yves Smith: Goldman Sachs’ Glass Ceiling Remains Intact

by Yves Smith | New Deal 2.0

Without serious structural changes,

Wall Street will continue to look like a country club.

Three women filed a sex discrimination suit against Goldman seeking class action status. It has gotten some attention in the press and on the Web for not the best reasons, namely, the complaint recounts in some detail how one of the plaintiffs, Christina Chen-Oster, a convertible bonds sales rep, had had a colleague force himself on her after a business-related group outing to a strip club. When she reported it some time after the fact (the perp had asked her to keep it secret), she was increasingly ostracized and marginalized.

While the salacious allegations are a vivid reminder of the sort of indignities that women can experience even in ostensibly well-run firms, they are the most obnoxious and disheartening example of the second-class status that women typically occupy in male-dominated fields. The fact is that Goldman has had long-standing problems with women, and the lawsuit’s charges are far more damaging and potentially costly than the commentary indicates.

I joined Goldman in its corporate finance department nearly 30 years ago. Goldman had just been sued for sex discrimination, and the firm seemed eager to counter its reputation as the worst place for women on Wall Street. But it wasn’t clear to me that things had changed so much as the worst extremes were addressed. For instance, a highly respected Vice President had propositioned every woman in the department. He was finally hauled before the Management Committee and told to cut it out. I arrived at the firm to learn that there was a betting pool on whether he would revert to his old form with me. While he didn’t, a partner in the firm did make advances. When he eventually backed off, the fallback was to give me a checklist of the sort of woman he wanted to date and ask me to set him up with suitable candidates.

Fast forward, and while the firm now has policies on dating, the area where the rubber really hits the road, pay and promotion, appears to be as retrograde as ever. Some of this may result from the shift at Goldman from having a substantial investment banking business to one where traders, the most macho and individualistic players, are now dominant.

Read the rest of the article here

Goldman Sachs Burnishes Its Tarnished Reputation

Goldman feels heat in suit vs. Dollar Thrifty
New York Post

By JOSH KOSMAN

Goldman Sachs' mantra that "clients come first" is under fire again.

The investment bank, which is still trying to burnish its reputation after settling fraud charges brought this year by the Securities and Exchange Commission, stands accused in a lawsuit of using information it gleaned from one client to win business from another.

The suit claims Goldman took "non-public information" that it got from advising Dollar Thrifty Automotive Group on one deal and used it to pitch rival Hertz Rental Global Holdings in a bid to win a lucrative investment banking assignment.

Shareholders of Dollar Thrifty, who are suing to block the rental-car company's $1.2 billion takeover by Hertz so that rival Avis can negotiate a better deal, are questioning the bank's actions in an attempt to undercut the merits of the deal, although Goldman is not a party to the lawsuit.

Read the entire article here

What Does Goldman Sachs do to Diminish its Tarnished Reputation?

Goldman swims downstream for PetroAlgae IPO
By Steve Eder

(Reuters) - No client is too small for Goldman Sachs Group Inc (GS.N) these days, even a company with no revenue that's owned by a hedge fund specializing in penny stocks.

In a move that surprised some observers, Goldman earlier this month emerged as the co-lead manager on an initial public offering for PetroAlgae (PALG.OB), a development-stage company that is trying to create oil from algae.

Florida-based PetroAlgae, which plans to raise up to $200 million in the offering, has lost $58 million over the past three years.

The renewable energy technology it is trying to develop is innovative, and other start-ups are trying to capitalize on it as well. But PetroAlgae is by no means a leader in the field. And unlike one of its rivals, it doesn't have dollars flowing its way from Exxon Mobil Corp (XOM.N), which is expecting to pump $600 million into the emerging industry.

Read the full article here

Goldman Sachs SEC Settlement In Perspective

As I predicted when the SEC first announced its' law suit against Goldman Sachs, they would settle out of court and agree to a meaningless fine.  No, I don't have a crystal ball (I can't afford the crystal anymore) and I am not a legal expert in these matters.  It is just that these types of deals seem to be how lawsuits of this kind are settled.  You see this was not a criminal case just a civil case used as window dressing to appease the masses who no longer can dine with the classes.

So we have it.  A 550 million dollar settlement.  Let's look at some old headlines so that we can put this into perspective. 

Goldman Sachs Posts Record Profit, Beating Estimates (Update4 ...
Jul 14, 2009 ... Goldman Sachs Posts Record Profit, Beating Estimates (Update4) ... government funds and report the first quarterly loss as a public company. ... The company's second quarter ended in May until Goldman Sachs changed its .

.Second-quarter net income was $3.44 billion, or $4.93 a share, the New York-based bank said today in a statement..

The settlement - 16 percent of it's second quarter 2009 Net Profit

Stunning Profit at Goldman Revives Gilded Pay Packages - NYTimes.com
Jul 14, 2009 ... Is the huge compensation pool at Goldman Sachs a sign that the financial ... Goldman posted the richest quarterly profit in its 140-year ...

Goldman posted the richest quarterly profit in its 140-year history and, to the envy of its rivals, announced that it had earmarked $11.4 billion so far this year to compensate its workers.

The settlement - 5 percent of 2009 employee bonuses.

Goldman Sachs Says Quarterly Profits Nearly Doubled : NPRApr 20, 2010 ... The powerful Wall Street bank may be facing government fraud charges, but Goldman Sachs reaffirmed itself as one of the most profitable ...

The powerful Wall Street bank may be facing government fraud charges, but Goldman Sachs reaffirmed itself as one of the most profitable banks in the country Tuesday, announcing quarterly profits of more than $3 billion. It's good news for the bank, which suffered a hit to its reputation — and its stock price — when the government last week announced it was charging Goldman Sachs with fraud in relation to its brokering of mortgage-related securities.

The settlement - 18.33 percent of 2010 first quarter Net Profit

But let's do some math so we can put it into perspective that everyone can relate to.

If you subtract the settlement from their first quarter earnings, they would be left with a paltry 2 billion 450 million dollars ($2,450,000,000).  Oh my, how will they ever survive this?

If you subtract the settlement from last year's bonus pool they would have had only 10 billion 800 million dollars ($10, 800,000,000) to distribute amongst themselves.  I can see them all standing in line to get food stamps to feed their families. 

They are laughing all the way to their offshore bank accounts.  A meaningless law suit and an even more meaningless fine.

What we have here is a government "gone wild".  A government that condones actions that harm the very people that elect them to protect them.  And folks, don't pin this just on Obama.  It began with Clinton, continued and expanded under Bush and is just being continued by Obama.  There is much more to this picture then meets the electoral eye.  It begs the question again and again of "who is really in control of our country"?

The damage done to us, the citizenry of this once great nation, is the only bi partisan effort we see.  This farce knows no political party, in fact, it seems to rule both major parties and it matters not who has control of Congress.  You must remember that the real bleeding began under GW Bush and the only change Obama brings us are the pennies left on the street for us all to pick up.

Again, there seems to be little outrage from the public and none from our media.  A slap in the face of all Americans, the millions still unemployed and underemployed, the millions who have lost their homes and the millions that are slated to lose their homes just this year alone.

I am personally sickened by this action or more appropriately this inaction.  The problems we face will not be corrected by this so called financial reform which is no more then new regulators appointed to regulate the already non functioning regulators.

Had our government been working right along and the regulators enforcing the rules and laws we already had in place, none of this would exist. 

This whole economic crisis was no more then a planned event to transfer the wealth of this nation to a handful of mortal beings who believe they are working for God.  But like the Greeks of ancient times, their God is created only in their mind.  The Greeks had their Zeus and we have our Blankfein.  Oh my, what a country.

The banksters still rule, the Fed still controls and the people still suffer.  Wake Up America.

What Does Barney Frank Know that Goldman Sachs Doesn't?

As reported here on GoldmanSachs666 yesterday - the media is giving this story two different spins. Why is Barney Frank strong-arming Goldman? Or more importantly, why is Goldman allowing him to? Hmm.

Now call me crazy but if I hadn't done anything illegal and had a few extra million lying around burning a hole in my pocket, the last place I would decide to put that money would be in the hands of a state attorney's office who might be investigating me for shady business practices. Let's keep in mind here that we're talking about Goldman Sachs, though, so maybe they have motivation which I as a mere mortal cannot possibly comprehend. Because we all know I'd never point fingers at $GS. Ha.

Via Bloomberg - what is Goldman up to?

May 14 (Bloomberg) -- Thanks to the commonwealth of Massachusetts, crusading attorneys general throughout the land now have a road map for extracting multimillion-dollar checks from Wall Street banks such as Goldman Sachs Group Inc.: Don’t accuse them of anything at all.

Why did Goldman pay if Coakley’s investigators couldn’t identify any infractions to allege? That’s a mystery. The only statement I could squeeze out of Goldman was a one-liner from a P.R. man, Michael DuVally. “Goldman Sachs is pleased to have resolved this matter,” he said. I’ll bet it is.

Strangely, HuffPo paints it as a settlement, with Barney Frank absolutely overjoyed that Goldman will now be somehow involved in saving Massachusetts homeowners from foreclosure to the tune of $50 million. What? I'm confused.

As much as I love to see Goldman under the microscope, this sounds really odd and opens up a can of worms that we probably don't want to crack open.

Read the full article - click here

U.K. Telegraph Not Afraid to Bump Up Against Goldman Sachs

NOTE: The U.K. Telegraph is the only main stream media to run something about Goldman Sachs' threat to file a lawsuit against me. That's pretty standard for the U.S. press and media to ignore the stinky and powerful Oger in the room. In fact, the U.S. main stream media, with a few exceptions, only runs stories about Goldman Sachs that seem either written by or approved by the Goldman Sachs Public Relations Department.

Why have none of the major papers or news programs not dared to ruffle a feather at Goldman Sachs, when this company is ripe for reporting. A simple look at who comes out of Goldman and where they go is enough to make for a full length movie. In any event, here is the U.K. Telegraph article . . .


Goldman Sachs hires law firm to shut blogger's site

Goldman Sachs is attempting to shut down a dissident blogger who is extremely critical of the investment bank, its board members and its practices.

Full Article - Click Here