Very Interesting Information on the Abacus Prospectus RE: Goldman Sachs

reply to post by zvezdar


Everything in that prospectus screams we are going against you and we will have conflicts of interest in forming this fund. After reading the prospectus would you go into business with them? I hope not if you have done your due diligence. No one made anyone sign the agreement. I really don't care either way they are obviously scam artists, but someone didn't due all their work before they agreed upon going into business with the devil.

Originally posted by GreenBicMan
reply to post by mythatsabigprobe

 

Read the last couple of lines again

It specifically states that there may be conflicts of interest..

according to that logic ....you just made fraud legal....

you offer some good advice sometimes....but geez this one is not so difficult ....and you are on the wrong side.

do you lobby for them (or does your dad)? kiddin

but really they were created as an instrument for paulson to short....you wanna make that legal under what they put in the contract....do a thought experiment as to all the ways this is insane....and never pass the smell test

but that is not to say a compromised judge will rule differently.

hell it could be a national security issue to rule in favor of GS...because the landslide of lawsuits that follows may threaten our gamblin...aheem....investment ban....aheem.... financial system which is integral to our economy....LOL

Originally posted by cpdaman
do you lobby for them (or does your dad)? kiddin

Actually, GreenBicMan does indeed aspire to work for Goldman Sachs, he's posted that information here before.

reply to post by mythatsabigprobe


I wouldn't turn that job down. I got denied though because I do not have a phd in mathematics. I would def work on their prop desk though.

reply to post by cpdaman


Paulson is not named in this civil suit.

So I am guessing there is no case against him at all. It's that French guy that is going to take the fall, I am sure this has been in works for quite a while.

Originally posted by GreenBicMan
will be interesting to see how the SEC pursues this as it is clearly delineated in the prospectus that was handed out that Goldman can/will go against you in the trade...

Abacus 2007-ACI is a Synthetic CDO...a portfolio of credit default swaps , so it's a given that there will be a counterparty on the other-side of the contract (short). As you said , that counterparty could be GS , The Paulson Fund , or whoever. IMO the major concern is GS failure to disclose Paulson's role in selecting the [90] CDO reference entities. A privilege for which he payed 15MM. In fact the GS marketing material appears misleading where it clearly states that an independent management firm (ACA) "will be acting as Portfolio Selection Agent in this Transaction".

Abacus 2007-ACI (Flip Book)

Page 12
[atsimg]http://files.abovetopsecret.com/images/member/3a9ea4a26383.jpg[/atsimg]

Page 13
[atsimg]http://files.abovetopsecret.com/images/member/2e96a2e4141d.jpg[/atsimg]

SEC alledges:

"[Goldman Sachs] arranged a transaction at Paulson’s request in which Paulson heavily influenced the selection of the portfolio to suit its economic interests," the SEC's complaint says, "but failed to disclose to investors, as part of the description of the portfolio selection process contained in the marketing materials used to promote the transaction, Paulson’s role in the portfolio selection process or its adverse economic interests."


[edit on 18-4-2010 by OBE1]

reply to post by OBE1


Why do you think Paulson is not implicated on this? And yes, you are assuming counterparty risk, I guess that is a given though.

But why should they have to disclose who is on the other end?

I mean it is like an option in a way right?

In the CBOE the other side of your trade is NEVER disclosed.

That is in a sense saying, ok GBM, you bought these puts and you lost...

But me saying.. wait.. Since Mr. X was on the other side writing this put it isn't fair.. someone refund me..

Since when in America are we getting our hands held when entering into transactions that carry risk? Is there no more due diligence in this country anymore? Should everyone get their hand held?

You may think this is exaggerating, but where in the hell do you draw the line? LIke I said, I am guessing GS is evil as hell, I have never disagreed, but too much crybaby # here IMO and it's starting to get a little excessive.

EDIT: I see ACA misrepresentation.. that is something else

[edit on 18-4-2010 by GreenBicMan]

So is..

ACA being implicated as well?

Also why not Paulson if he was a benefactor knowingly breaking the rules?

Is this FABBY FAB FABRICE guy just going to take the hit for all of these transactions? So like he was the "only one" that knew about these tricks/

EDIT: Doesn't look like ACA is being implicated that I can see of any wrong doing, if they were in fact paid for their services I would hope they would be going down as well.

Also, did Paulson really do anything wrong? I mean he just picked out some things and that is it.. He shouldn't have anything to do with the agreement between ACA -> GS IMO.

[edit on 18-4-2010 by GreenBicMan]

Here's a snip , but I recommend reading the entire SEC complaint.

Including internal emails between Tourre > ACA > Paulson.

F. GS&CO MISLED INVESTORS BY REPRESENTING THAT ACA SELECTED THE PORTFOLIO WITHOUT DISCLOSING PAULSON’S SIGNIFICANT ROLE IN DETERMINING THE PORTFOLIO AND ITS ADVERSE ECONOMIC INTERESTS

36.
GS&Co’s marketing materials for ABACUS 2007-AC1 were false and misleading because they represented that ACA selected the reference portfolio while omitting any mention that Paulson, a party with economic interests adverse to CDO investors, played a significant role in the selection of the reference portfolio.

38.
Similarly, a 65-page flip book for ABACUS 2007-AC1 finalized by GS&Co on or about February 26, 2007 represented on its cover page that the reference portfolio of RMBS had been “Selected by ACA Management, LLC.” The flip book included a 28-page overview of ACA describing its business strategy, senior management team, investment philosophy, expertise, track record and credit selection process, together with a 7-page section of biographical information on ACA officers and employees. Investors were assured that the party selecting the portfolio had an “alignment of economic interest” with investors. This document contained no mention of Paulson, its economic interests in the transaction, or its role in selecting the reference portfolio.

SEC

reply to post by OBE1


On those 2 points I would have to agree, guilty as charged.

___________________________________

On the other hand, after reading the prospectus, doing your due diligence to investors would you go into this agreement? I am doubting you would if you read that part of the prospectus...

So did they lie? Yeah, I guess they did in fact misrepresent the situation.. Although they almost did straight out tell you they were going to stab you in the back in the fine print..

reply to post by GreenBicMan


It's not that people didn't read the contracts mate.. it's that just because you put it in a contract, does not make it legal. You cannot sell a financial product that you design to fail .. or, you cannot sell a financial product and bet against it.. the conflict of interest is against he interest of the buyer. Ultimately, the buyer is always protected before the seller.. Goldman is getting into trouble because they packed certain CDO's with utter crap .. then sold them off, while taking CDS contracts out on the CDO they just sold. They knew the CDO would fail, because they knew what was in it.. the bank/firm that buys it sees the CDO default, Goldman not only gets paid for selling the CDO, but then collects the insurance payment via the CDS. Now, you would think that the buyer would buy a CDS from Goldman, since they sold the product? No .. most CDS contracts went through AIG.

reply to post by Rockpuck


And that is what is going to make Goldman Sach fail (unless that is what they want so they can regroup under another name), the door have been opened for all kind of law sues by their investors.

Things are going down the hill for Goldman Sach after all, but I am still doubtful about it.



[edit on 18-4-2010 by marg6043]

reply to post by Rockpuck


Well actually I think you can go against it. Outlined in the prospectus RE GS and also the one I typed out on the first page from the REIT prospectus that I had here..

But it is another to MISREPRESENT this in some fashion.. I agree. I don't think I was clear on what actually went on before it was pointed out.

But IMO some due diligence should have been done on the investors part as well. They share IMO a 50% cut in this.

For example..

I sell my automated programs for a 10% cut.

Program totally goes down and loses all money.

Does this other party have a right to come after me? No, because we both had the same information going into it.

Now, is it another thing that I misrepresented my past trades and made it seem like it won more money than it actually did over previous time period? Definitely, and also past performance is no indication of future results But I do not agree with that saying, but everyone is entitled to their own opinion of course.

Originally posted by GreenBicMan
On the other hand, after reading the prospectus, doing your due diligence to investors would you go into this agreement?

BTW , the OP isn't from a prospectus , it's a quote taken from page 9 of the Abacus 2007-AC1 Flip Book...a marketing tool.

I haven't seen a copy of the Abacus CDO prospectus , and I'm too lazy to search SEC/EDGAR to try and find it , but if somebody has one , please post...I'd really to read it.

***

On a related note , here come the ambulance chasers!

What OTC derivatives do not do to International Investment Banks, litigation will – Jim Sinclair , 2005.

[edit on 18-4-2010 by OBE1]

reply to post by OBE1



Really?

I didn't have it in my possession, I was just copying and pasting.

Although, the REIT verbiage was in fact from a prospectus a few posts underneath, which also talked about going against you.

__________

Regarding the other.. I guess now would be a good time to find your way back into FAZ if that really is the case. If you track the relationship between the two (FAS & FAZ) it is quite an interesting story to say the very least.


EDIT: I will be changing subject title then I suppose as that is misleading -- won't let me edit..

[edit on 18-4-2010 by GreenBicMan]

[edit on 18-4-2010 by GreenBicMan]

Originally posted by GreenBicMan
reply to post by OBE1

 

Really?

Just thought you might want to edit your thread title...you know...for ATS accuracy. No biggie though...most financial prospectuses are 90% disclaimer anyway.

reply to post by OBE1


I tried

If you see above it wouldn't let me

reply to post by GreenBicMan


You're missing the point.. just because it's in a prospectus.. just because an agent tells you something... does not make it legal. The SEC obviously took into account the information on the prospectus. The SEC is more concerned with what they did which was against the law.... regardless of what their prospectus says.

EDIT: I agree, investors SHOULD have studied in depth what they were buying.. but then again, the same thing is said of little old ladies duped into buying a low interest annuity without payouts and withdraw penalties for 10 years.

As I say, the buyer is always considered before the buyer.. there are certain levels of protection regarding loss of investment, but when information is passed illegally, or behind the scenes illegal actions are taking place.. in voids the sellers rights to protection.

[edit on 4/18/2010 by Rockpuck]

reply to post by Rockpuck


I agree, they intentionally misinformed people. That is disgusting. It also gives other people like me a bad name and you as well.

I do want to point out though that it would be legal for this REIT for example to go against you as long as they did not misrepresent themselves. I am guessing if this REIT says this you could pick up another accredited investment prosp. and see the same thing.

In fact when I talked to one of the selling agents on the phone for a HF with my dad he told me on the phone that there would be conflicting positions in play most likely at all times in fact. That does border in the zone of "hedging" though..

reply to post by Rockpuck


Also, I may have one objection to what you say.

IMO there is no possible way of ever knowing if something is going to fail or not. Every investment carries an inherent risk IMO. There was a risk the housing market could have kept on pace for the next 24 months right? In this instance they probably would have taken huge hits on this.