Very Interesting Information on the Abacus Prospectus RE: Goldman Sachs

GreenBic - You just hit the nail on the head. No one knew when the market would crash - It was a gamble on both sides of this bet. It just turns out that one side was dead on accurate. It could just as easily have gone the other way if the market had continued to climb upwards.

I tend to take the "Buyer Beware" approach to this one. Anyone that was buying these investments had to have known that they were playing with a very volatile stack of cards. You can say that Goldman stacked the deck - sure - but when you play with snakes, you run the risk of being bitten.

reply to post by CookieMonster09


Thanks for backing me up here..Although I feel others may feel slightly the same way

But they are straight up guilty if misleading by the nature set forth by the posters on this thread in addition to what I have written.

But in the industry it's called due diligence or aka buyer beware. In fact due diligence is required by the other party. If not, this is a breach of fiduciary responsibility is it not?


Anyway, I'm guessing a tarnish in the gold exterior of GS, but they have prob. been planning for this rainy day for a while.

reply to post by GreenBicMan


Oh I agree. You never know.. something designed to be very, very safe. The safest in fact. Could fail over night. Hence what happened to nearly every single "low risk" mutual fund/401k etc.. they invested in companies like banks (who could never disappear, so its safe) .. it made sense, if you look at stock history, their stocks are very safe.. until 2007.

But when you sell a product that claims to have a return based on diversified loans.. but all the loans are bad loans and you know given enough time it HAS to fail... well.. that's a conflict of interest. I believe the SEC is targeting their agents specifically, for misleading.. the products being so complex and hard to understand they simply waved their hands saying "what could go wrong?!" and offering another very expensive glass of wine. Not all the investors were bankers.. most of them were municipalities.. from all over the World.. banks like Goldman wined and dined these small town schmucks into forking over millions, hundreds of millions, into these garbage cans.

But.. I still don't think anything will happen to Goldman. Get a slap on the wrist, told they are naughty little bastards, and sent on their merry way.

Interesting..


RockPuck - I cannot see any of your posts anymore and I DID NOT block you.. that is weird.

Originally posted by mythatsabigprobe
You're wrong.

The SEC knows something about securities and broker's obligations. This isn't a suit over Goldman taking a short position against it's clients, it's a suit about Goldman committing fraud by creating these securities.

Actually you are wrong my friend. The lawsuit is about Goldman having not properly disclosed the conflict of interest, and that John Paulson picked the investments as a prominent short seller. They can create an investment to short, but they have to properly disclose it.

To GreenBicMan, a simple legal sentence saying there may or may not be conflicts of interest does not get Goldman off the hook. There are certain levels of disclosure that must be met, depending on what is being disclosed. The argument here, is that it should have been disclosed that the investments were picked by a short seller for the purpose of him and Goldman's interests short selling it. So, a standard legal disclosure statement doesn't cut the mustard for disclosure. I am sure what you cut and paste appears in nearly all Goldman propectus'. That does not qualify as legal disclosure.

[edit on 19-4-2010 by johnny2127]

reply to post by johnny2127


Yes, as if you look it is in a REIT prospectus I had laying around of my dad's as well..

What do you think is going to come out of this? basically nothing, huh?

IMO this has more to do with Financial Reform Legislation being passed than anything.. but I do def. think they are guilty of the above that we were speaking about..misleading clients / disclosure of the above

Originally posted by GreenBicMan
reply to post by johnny2127

 

Yes, as if you look it is in a REIT prospectus I had laying around of my dad's as well..

What do you think is going to come out of this? basically nothing, huh?

IMO this has more to do with Financial Reform Legislation being passed than anything.. but I do def. think they are guilty of the above that we were speaking about..misleading clients / disclosure of the above

In my opinion, this will result in some sort of fine or settlement. Most likely this will result in multiple other lawsuits as well. I think this was nothing more than a govt PR campaign for the financial regulatory reforms Obama wants to pass. If they were super serious about it, it would have been a criminal fraud case, not civil.

However, in my opinion, Goldman is in the wrong here, if the facts of the case are what they seem. If they knowingly create a product that they think will most likely go down, and the profit will come on the short side, they literally defrauded those that bought the product long since there wasn't disclosure about the real purpose of the investment. Think about it; someone goes on CNBC and if they are asked about a stock they have to disclose purely that their fund owns the stock. Thats 1 out of hundreds of positions they own. In this, they failed to even mention that the investment vehicle was made and selected by a short seller for the purpose of maximizing profits on the short side. Thats a pretty important disclosure they failed to make.

Originally posted by johnny2127

Originally posted by GreenBicMan
reply to post by johnny2127

 

Yes, as if you look it is in a REIT prospectus I had laying around of my dad's as well..

What do you think is going to come out of this? basically nothing, huh?

IMO this has more to do with Financial Reform Legislation being passed than anything.. but I do def. think they are guilty of the above that we were speaking about..misleading clients / disclosure of the above

However, in my opinion, Goldman is in the wrong here, if the facts of the case are what they seem. If they knowingly create a product that they think will most likely go down, and the profit will come on the short side, they literally defrauded those that bought the product long since there wasn't disclosure about the real purpose of the investment. Think about it; someone goes on CNBC and if they are asked about a stock they have to disclose purely that their fund owns the stock. Thats 1 out of hundreds of positions they own. In this, they failed to even mention that the investment vehicle was made and selected by a short seller for the purpose of maximizing profits on the short side. Thats a pretty important disclosure they failed to make.

Yeah, they are definately in the "wrong", but I am doubting their story will exactly spin that same web of information like you just posted. Give it 5 more years and Dow at 15,000 and I bet all the wealthy will be begging them to take their money back. Must be nice always being in the drivers seat.

Originally posted by GreenBicMan

Originally posted by johnny2127

Originally posted by GreenBicMan
reply to post by johnny2127

 

Yes, as if you look it is in a REIT prospectus I had laying around of my dad's as well..

What do you think is going to come out of this? basically nothing, huh?

IMO this has more to do with Financial Reform Legislation being passed than anything.. but I do def. think they are guilty of the above that we were speaking about..misleading clients / disclosure of the above

However, in my opinion, Goldman is in the wrong here, if the facts of the case are what they seem. If they knowingly create a product that they think will most likely go down, and the profit will come on the short side, they literally defrauded those that bought the product long since there wasn't disclosure about the real purpose of the investment. Think about it; someone goes on CNBC and if they are asked about a stock they have to disclose purely that their fund owns the stock. Thats 1 out of hundreds of positions they own. In this, they failed to even mention that the investment vehicle was made and selected by a short seller for the purpose of maximizing profits on the short side. Thats a pretty important disclosure they failed to make.

Yeah, they are definately in the "wrong", but I am doubting their story will exactly spin that same web of information like you just posted. Give it 5 more years and Dow at 15,000 and I bet all the wealthy will be begging them to take their money back. Must be nice always being in the drivers seat.

I don't think this is the end of Goldman. I am not sure where you got that from what I said. What Goldman did here was wrong. But they are still the best on Wall St and the big money that is there will most likely stay there. What will happen is completely predictable. They'll pay fines out and pay damages, and some high profile people will lose their jobs as scapegoats and then they will continue business as usual.

reply to post by johnny2127


Maybe you misunderstood me because I don't think that either. In fact I think gs comes out better than you thought with nearly a scrape.

Pre-market they were cooking up again but looks like that leveled off already.

edit: I should clarify, what I meant in the previous post was I am doubting GS will tell a story of betrayal and fraud, but more something of a "neutral" tone where they believe that this was fairly priced/plenty of disclosure etc..

If you haven't noticed already sometimes I am not the best in proofreading material before clicking send

[edit on 20-4-2010 by GreenBicMan]