Friday, April 16, 2010

Why is Goldman Sachs being sued by SEC ?

Of course I am cynical - I don't think this is going to result in any meaningful change. All that will happen is the main employee mentioned (Fabrice Tourre) will be let go, GS will not admit to any wrong doing, pay a token file and then it will be business as usual.

Some things are interesting.
  • The announcement happened on an option expiration day. Why didn't the SEC do this over the weekend ? Or on Monday morning ?
  • GS was the top contributor (over $1M) to the democratic party in 2008 elections.
  • GS (not the company, but via employees and PACs) donated about $1M to President Obama's election campaign.
  • This is an election year. Maybe the political gods need a sacrifice. Maybe. Most likely not. Most likely, it's just to improve perception.
  • The Financial Reform Bill is on agenda. Maybe this is related.
So maybe I am cynical, or maybe not.

In any case, if you want to understand what exactly is the accused wrongdoing here, please see this video by my favorite news anchor Dylan Ratigan. He uses a simple analogy to explain and make this complex matter accessible to all of us.


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