“We Did Nothing Wrong . . . And We Promise Never to Do It Again”

I have a quote in Alan Abelson’s column in Barron’s on the Goldman Sachs case:

“WHILE IT MAY SEEM LIKE an octopus squid to lots of civilians, Goldman Sachs doesn’t lack for fans on Wall Street. Any number of investment pros and their followers staged a brief (very brief) celebration of the news that Goldman had settled the SEC’s civil-fraud complaint against it for $550 million. The celebrants couldn’t all have relatives who worked for the firm.

Even its most buoyant admirers oohed and aahed over what a coup it was for the firm to get away so cheaply, having only to say it didn’t do anything wrong and pledging never to do it again.

They kept repeating that $550 million might seem like a big wad of dough to the little people, but it’s only a couple of weeks’ worth of profit for Goldman.

As Barry Ritholtz, proprietor of Fusion IQ and stalwart market-watcher, points out, the very people who are congratulating Goldman on its “triumph” were blithely dismissing the charges when first made public with the claim “the SEC doesn’t have a case.” Well, Barry insisted it did, and we quoted him to that effect back in April.

And he now thinks Goldman suffered a “massive” defeat that is being spun as “some sort of victory.” He notes that Goldman paid the highest fine/settlement in the history of the SEC. It admitted material omissions and misstatements in its marketing materials, disgorged profits, made up investor losses and faces significant risk of future litigation.

Goldman is an incredible money machine but that, Barry insists, won’t fix the severe damage to its reputation, the “black eye” inflicted by the indictment and the settlement.”

I am sure there will be more commentary on this same subject soon . . .


An Outbreak of Investor Discontent
Barron’s, JULY 17, 2010

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