The SEC vs. Goldman: The Kitty has Claws

Submitted by Mary Bottari on

cat clawsLast week’s Securities and Exchange Commission (SEC) action against Goldman Sachs landed like a bombshell on Wall Street. To the titans of Wall Street it must have seemed like the nice little kitty they had been stroking and cuddling over the years, viciously sank in teeth and claws.

The SEC has faced intense criticism from the public and media regarding the way it loosened leveraging rules, a key cause of the implosion of major investment banks and the meltdown as a whole. The SEC also took a pounding over its handling of the Bernie Madoff fiasco. SEC officials chose to ignore explicit warnings from whistleblowers that Madoff was running a Ponzi scheme. The SEC also mishandled its first major case related to the crisis, being roundly scolded by a federal judge for not being tough enough on Bank of America’s secret bonus and salary deal with Merrill Lynch.

As one New York Times article aptly put it: "In the last few years, the Securities and Exchange Commission seemed like the cop in the doughnut shop, sitting idly by while the likes of Lehman Brothers and Bernard L. Madoff ran amok."

But last week, the SEC picked itself up, brushed itself off and launched back into the fray. It accused Goldman Sachs of failing to disclose that an investment vehicle it created was commissioned and designed to fail by a hedge fund manager with an adverse interest. With this new case, which only advanced after an unusual partisan vote of the SEC the board, top SEC investigators are sending the strong message that they are back on the beat and not afraid to tackle the biggest institutions on Wall Street. Goldman, it should be noted, denies any wrongdoing.

Huge Implications

The implications of this case are huge for both Goldman and the SEC. First, many of the investors who were harmed by the deal were foreign banks. As a result, the British and German governments are contemplating suing Goldman for losses suffered by banks in their respective countries. Combined with the controversy over Goldman’s role in the Greek debt crisis, the SEC case deals another hard blow to Goldman's global reputation. Goldman's stock dropped significantly Friday after news of the SEC action broke. As more details are revealed about the case, Goldman stock may continue to take a pounding. Goldman’s inept press team will no doubt try to cook up more silly greed-washing schemes.

But Goldman’s loss could be the SEC’s gain. If successful, the SEC action could repair its tarnished reputation. This case is one of the first to be brought by the SEC's newly structured-products group and new enforcement chief Robert Khuzami, a former federal prosecutor. The case is a gamble as the basic transaction being investigated is a common one. But as Christopher Whalen of Institutional Risk Analytics remarked: "The SEC’s move marks an escalation in the battle to expose conflicts of interest on Wall Street and exposes a ‘cynical, savage culture’ that allows dealers to deceive one customer to benefit another."

The SEC has said it is looking into other deals like this one at other Wall Street firms. Stay tuned. Apparently this kitty now has claws.

Banking
BanksterUSA
Economy
Real Economy Project
Mary Bottari
Mary Bottari

Mary Bottari is a reporter for the Center for Media and Democracy (CMD). She helped launch CMD's award-winning ALEC Exposed investigation and is a two-time recipient of the Sidney Prize for public interest journalism from the Sidney Hillman Foundation.

Read more here.

MORE LIKE THIS:

Comments

Anonymous replied on

An “octopus wrapped around the face of humanity” as one journalist put it; the New World Banking Order has arrived. In 2009 speculative, uncontrolled derivatives were the Worlds largest market at an estimated 600 Trillion. The Worlds total economic output was an estimated 58.07 Trillion and the total World bond market was an estimated 82.2 Trillion. Yet, there is no “crime” that the bankers can be charged with as they bankrupt citizens and Nations into the New World Order? The appropriate criminal charge should be Treason to the American People and our Democratic Republic and Constitution. The members of the Trilateral Commission and the Bilderberg Group in government and banking who conspired to overthrow our soverenity as an independent nation, who conspired to bankrupt our Treasury with three unjust Wars and multinational corporate “rolling” bailouts, conspired to control mass media “free Press” propaganda, conspired and manipulated “financial crisis” for their own gain, conspired to “relocate” American industry and technology, conspired to offshore “American Income Tax”, and who have conspired to enslave American citizens with National debt (about $64,000 per citizen) and personal debt. Deserve the death sentence by firing squad for Treason. Obama, your New World Order is Totalitarian and we Patriots, American free citizens, will fight for our Democracy, Independence and Freedom.

Lawrence Baker replied on

SEC vs. Goldman- 21st Century age of Enlightenment or Tyranny? Will bankers and big oil lead humanity into an enlightened 21st. Century of green energy and humanitarianism or will this be the century of World Totalitarianism of the New World Order? We know that “morality” is a “no” word for bankers, big oil and investors alike; yet they are leading us into the New World Order with their heartless and coldblooded culture of greed by the few. World conquest by tyranny is not new and it certainly is not orderly; it is chaos. Hitler already tried World domination by tyranny in the last century. The nations of Greece, Latvia, and Iceland have already fallen into “order” and Spain, France, Germany, Portugal, Ireland, Italy, United Kingdom and the United States of America are scheduled to fall into “order”. The American people do not want to lose our Democracy, Independence and Freedom; yet this World totalitarian agenda emanates from the United States of America and is lead by the Bush/Obama Administration in our name. The World is looking at the American people as their last resort for salvation and praying that the American people will stand up to this evil force and do the right thing. By saving ourselves, we will also save them. We are the only ones who can change the direction of our own country with what freedoms we have left. The SEC vs. Goldman is a test of strength between the American people and the World bankers, indeed, the New World Order. If the American people do not bring the bankers to Justice in our court system; the bankers will be free to dominate the World. The injunctions will lead to the White House and the Bush/Obama Administration which is dominated by Trilateral World bankers. Zbigniew Brzezinski is the designer and architect of the bankers Trilateral Commission and the New World Order; he is also Obama’s top advisor. Geithner, Volker, Greenspan, Summers, Corrigan and Peterson are all of the same banking family of World bankers (America is their host) Goldman Sachs, Morgan Stanley, Bank of America, JPMorgan Chase, Wells Fargo Federal Reserve, IMF, World Bank etc; their tentacles reach into every economy in the World. The World total economic output in 2009 was 58.07 Trillion and the total World bond market was 82.2 Trillion. The largest market in the World is the Derivatives market at 600 Trillion and is used primarily by the bankers as a weapon of mass destruction of economies to bring them in line with the New World Order. Their modus operande is the same for American citizens as it is for Nations. The banker and oil dominated Trilateral Bush/Obama Administration has purposely driven the United States of America into debt under their expert banking management by the systematic pillaging of our Treasury. Our National debt interest is at 15% about the same as the United Kingdom according to Moody’s bond rating March 15. “the U.S. will be paying about 15 percent of revenue in interest payments, more than the 14 percent limit that would lead to a downgrade to AA, Moody’s said.” http://www.bloomberg.com/apps/news?pid=20601068&sid=a0a8xAghPS8I In the financial world, loosing your AAA bond rating changes the banking agreement substantially (as every home owner knows) that is when the fine print kicks in and the spiral to the bottom begins. Look at Greece, Latvia, Iceland and now the UK. Germany, France and Spain AAA credit ratings are in danger as reported in the U.K Telegraph on March 15 (referring to Moody’s) “The US rating agency said the US, the UK, Germany, France, and Spain are walking a tightrope-“ http://www.telegraph.co.uk/finance/economics/7450468/Moodys-fears-social-unrest-as-AAA-states-implement-austerity-plans.html To control and accelerate that rush to the bottom of Nations, major banks are frontloading the odds of default of a Nation down on Wall Street in a computer so they can control and manipulate trades with high-frequency trading in derivatives. High-frequency trading is how Goldman Sacks (U.S.A) makes at least 200 million a day in derivatives on Wall Street and accounts for most of the 3.3 billion made in profit last quarter. This one example of Goldman Sachs (U.S.A) operations is but the tip of the arrow head and the shaft is sure to follow. By flying the United States of America economy and government into the ground the New World Order of Trilateral Traitor bankers become winners. Now, who is the terrorist? I hope Americans have empathy for the people of Greece and all the other people of Nations who face “Austerity measures” because their destiny will soon be our own fate. The bankers are brutal; the National financial burden is on the people with forced tax followed with the gutting of social services and privatization of National infrastructure and National Natural Resource for pennies on the dollar. If you can empathize with these people I suggest that you take action and button-hole your representatives in Congress today and tell them to make a stand for the American People against this takeover of our government by Trilateral bankers and the New World Order. Demand that they insist that ALL of the subversive Trilateral members in government to STAND DOWN. Insist that Treason charges be served on all who conspired to overthrow our American Independence, Democracy and Freedom (there are only about 1,500 Traitors). Insist that Free Press, the watch-dog of Democracy, be restored by breaking up the monopolies in the Media. Main Street Capitalism, Competitive Market, and Free Enterprise are America’s tried and true standard and our economy and government can recover from this treachery if we act now by getting back to our roots of industry, manufacturing and technology instead of being smothered by the Multinational Corporate Empire, by proxy, by our government. Our economy needs Fair Trade not (Free (sic) Trade and Free Enterprise and Competitive Market not controlled markets by the multinational corporate monopolies.