Goldman Sachs denies betting against its clients

[Black Swan]

Banksters, I love this quote/description of 'em in their finest hour;

Sylvain Raynes, an expert in structured finance at R & R Consulting, told the New York Times:

"The simultaneous selling of securities to customers and shorting them is the most cynical use of credit information that I have ever seen. When you buy protection against an event that you have a hand in causing, you are buying fire insurance on someone else's house and then committing arson.''

A spokesman for Goldman said: "We respectfully disagree with this view."

http://www.telegraph.co.uk/finance/...nies-betting-against-its-clients-on-CDOs.html

 

[Trader333]

If GS are doing this then they are never going to admit to it as it would be commercial suicide with a consequential loss of a large amount of their client base in my view.


Paul

 

[gooseman]

if a client trades with them they are betting against the client as GS would be the counterparty. they can choose to offset it elsewhere if they so wish.

 

[cr6196]

i don't understand...as goose rightly points out to trade with clients they have to be taking the other side...i would add that often different departments in GS often trade with each other, Risk Arb Group and Prop trading group in mid 90s and i remember reading an account of Silva Jothy buying options on German bond/Italian bond spread from the GS options dept in the early 90s and making a killing at their expense...

orginally, GS were reluctant to take big positions against clients and was one of the last big banks to move away from just being an agent in trades despite the involvement in block trading but became the massive principal trader we know today along with everyone else in the 1980s.

And to add relevance, they did have a massive long position in the CDO index (ABX? i think) but started hedging against thier position because the of the liquiidity risk in 2006 and i believe this order came from Blankfein, shortly before the trouble but these kind of accusations on not giving properietry info to clients has been often levelled against GS, i.e Penn Central default and more recently in 2001...

 

[gooseman]

it's like anyone who will offer a two-way market. they see the flow by virtue of being in the middle. there are obviously chinese walls in place to stop different depts getting the whole pic.

i remember a case recently of a bank sales guy leaving a line open to his trading desk so they could hear the flow. FSA rightly came down on him very hard.

i actually think the banks make the market more transparent not less. say GS as you suppose above sell a bunch of whatever derivs to XYZ LLP and start smashing these in the market, or a similar product, someone with equal firepower will see these as undervalued (mean reversion principle) and start lifting them.

what you are talking about is market manipulation and that is an area for the regulators/exchanges.

 

[cr6196]

it must be nigh on impossible nowadays to manipulate and major market for a significant amount of time?
as i understand it, GS has better "chinese walls" in place than most, after it getting repeatedely nailed, 2nd highest fine in 2002 or whenever behind merrill and its role as a major investment banker, underwriter and major block trader with asset managers...i remember hearing some clients were going to stop dealing with GS in the 80s when it was ramping up principal trading, particulary asset manager's traders but their protests never came to anything...interesting topic but impossibly complicated.

 

[oildaytrader]

$550m settles Goldman fraud case

http://www.boston.com/business/articles/2010/07/16/550m_settles_goldman_fraud_case/

 

[gooseman]

settled with no admissions of guilt ODT. Wrong again. You must be used to it by now.

 

[oildaytrader]

settled with no admissions of guilt ODT. Wrong again. You must be used to it by now.

Same thing.They paid the fine for fraud charges $550m .

This is just one the the few times , the SEC has not remained in bed with crooks.Otherwise there would thousands of cases against Wall street and city insiders .

 

[gooseman]

direct quote from your article: "Goldman did not admit to violating any laws."

 

[Black Swan]

has GS paid back all it's original (2008-9) govt assistance?

 

[oildaytrader]

http://www.dailymail.co.uk/news/art...robbers-pinstripes-prosecute-rogue-banks.html

George Osborne: I'll nail robbers in pinstripes and prosecute rogue banks

Mr Osborne said it was clear that many of those responsible for helping to trigger the credit crunch who should have been prosecuted have escaped justice.

Greedy bankers have been accused of putting their own interests before those of clients, taking massive gambles on investments to boost their profits.

‘Stealing someone’s pension or their mortgage through some complicated financial fraud is just as serious as mugging an old lady or burgling someone’s house,’ he said.

‘Unfortunately, because the people committing these financial crimes are wearing suits and ties and sitting in offices, they think they can get away with it scot-free. That has to end.

‘We must make it clear that there is not one law for rich fraudsters and another law for common criminals.’

 

[oildaytrader]

direct quote from your article: "Goldman did not admit to violating any laws."

They have become Mother Theresa and handed out $550m to the sec cons?

 

[scose-no-doubt]

I think GS was one of the first to pay back, Swanny.

 

[DionysusToast]

I wonder how much they netted from the fraud ? More or less than $550M ?

For those wanting to jump back in to GS on this news - tread carefully. By paying they are admitting guilt (IMO) and paving the way for civil cases.

 

[scose-no-doubt]

http://www.dailymail.co.uk/news/art...robbers-pinstripes-prosecute-rogue-banks.html

George Osborne: I'll nail robbers in pinstripes and prosecute rogue banks

Mr Osborne said it was clear that many of those responsible for helping to trigger the credit crunch who should have been prosecuted have escaped justice.

Greedy bankers have been accused of putting their own interests before those of clients, taking massive gambles on investments to boost their profits.

‘Stealing someone’s pension or their mortgage through some complicated financial fraud is just as serious as mugging an old lady or burgling someone’s house,’ he said.

‘Unfortunately, because the people committing these financial crimes are wearing suits and ties and sitting in offices, they think they can get away with it scot-free. That has to end.

‘We must make it clear that there is not one law for rich fraudsters and another law for common criminals.’

Yes, ODT George Osbourne is going to put his friends in jail :S

Also have you ever even seen a balance sheet for a pension fund? The bulk of AUM aren't even managed in-house they're managed by banks so it's in their interest for the fund to succeed. Also if a pension fund manager can't meet his liabilities then both him and the actuaries have done a 5hit job and the fund should better people. Perhaps people who work for a fund that makes money off the likes of complacent/incompetent fund employees.

Also, how can you steal someone's mortgage?

This article is drivel and it's offensive to the readers intelligence. You'd do well not to quote bandwagon mis-direction propaganda in future.

 

[oildaytrader]

Yes, ODT George Osbourne is going to put his friends in jail :S

Also have you ever even seen a balance sheet for a pension fund? The bulk of AUM aren't even managed in-house they're managed by banks so it's in their interest for the fund to succeed. Also if a pension fund manager can't meet his liabilities then both him and the actuaries have done a 5hit job and the fund should better people. Perhaps people who work for a fund that makes money off the likes of complacent/incompetent fund employees.

Also, how can you steal someone's mortgage?


.

Lumber them with money for old rope investments like dotcom issues ,rob investors with useless lbos and mbos, leaving investors ripped off.

 

[scose-no-doubt]

How can you steal a mortgage.
Mortgage - A fixed charge secured against an asset. A liability.
You can come and steal all of my liabilities if you like lol. Anyone else's too I'm sure.
Why would it matter who holds it if the terms remain the same?
If you bought a house at the top of the market then unlucky but you shouldn't be angry because capital appreciation is no more an entitlement in housing than it is in stocks. They made a financial decision and unfortunately hey got it wrong. Yes they were probably suckered in a bit but if this is a a question of morals rather than a purely financial matter, then why aren't estate agents and mortgage brokers heads on the chopping block too? It's their business to see the change in trends isn't it. You can't single out villains.
We all know that banks took the pi55 a bit but to say things like fund managers etc weren't in on it or didn't care because their remuneration wasn't based on capital retention (just as the banks traders etc don't care who they profit from) is ridiculous.

 

[arabianights]

What nonsense odt talks

 

[oildaytrader]

How can you steal a mortgage.
Mortgage - A fixed charge secured against an asset. A liability.
You can come and steal all of my liabilities if you like lol. Anyone else's too I'm sure.
Why would it matter who holds it if the terms remain the same?
If you bought a house at the top of the market then unlucky but you shouldn't be angry because capital appreciation is no more an entitlement in housing than it is in stocks. They made a financial decision and unfortunately hey got it wrong. Yes they were probably suckered in a bit but if this is a a question of morals rather than a purely financial matter, then why aren't estate agents and mortgage brokers heads on the chopping block too? It's their business to see the change in trends isn't it. You can't single out villains.
We all know that banks took the pi55 a bit but to say things like fund managers etc weren't in on it or didn't care because their remuneration wasn't based on capital retention (just as the banks traders etc don't care who they profit from) is ridiculous.

If you have endowment mortgages invested in stockmarkets and someone fat cats are selling old rope investments, defrauding other institutions like rbs with fraud cdos ,the loss of value of investments due to fraud is one way of stealing people's mortgages.