Goldman Sachs Settles Civil Fraud Case for $550M—Less Than It Reportedly Expected, and With No Admis

[Donnachaidh]

http://www.democracynow.org/2010/7/16/goldman_sachs_settles_civil_fraud_case

Goldman Sachs Settles Civil Fraud Case for $550M—Less Than It Reportedly Expected, and With No Admission of Criminal Wrongdoing

Goldman Sachs has agreed to pay $550 million to resolve a civil fraud lawsuit over selling a mortgage investment that was established to fail. While the SEC hailed the $550 million settlement as the largest in Wall Street history, many outside analysts questioned why the government didn’t demand more. Investors responded favorably as Goldman Sachs shares jumped by five percent in late trading, adding far more to the firm’s market value than the amount it will have to pay in the settlement. We speak to Matt Taibbi of Rolling Stone.

:snip:

MATT TAIBBI: Well, you know, originally, Goldman didn’t want to settle. So the fact that it was settled at all is interesting. But, you know, this is sort of part of a larger pattern of how, you know, offenses are dealt with by our regulatory enforcement mechanisms. You know, going back twenty years, almost every time we have an instance where a very powerful bank is caught doing something, you know, unethical or immoral, the procedure tends to be a fine which is much less than the profits they generated using that activity, followed by no admission of criminal wrongdoing. And, of course, nobody ever goes to jail. And the most famous example of that was the so-called global settlement, after the internet stock bubble, in which, you know, a variety of offenses involved with the tech bubble were sort of lumped together by then-Attorney General Spitzer, and although some companies took a big hit—Citigroup had to pay $400 million—it was much less than all these guys made during the stock bubble. And so, the important fact here is that these companies know that even if they get caught, the worst-case scenario, they’re going to pay a fraction of the money they make doing this stuff, and that’s why they’re continually emboldened to do it.

AMY GOODMAN: I mean, it is stunning. As the Times put it, "News of the settlement sent Goldman’s shares 5 percent higher in after-hours trading, adding far more to the firm’s market value than the amount it will have to pay in the settlement."

MATT TAIBBI: Right.

AMY GOODMAN: So it profited from the settlement.

MATT TAIBBI: Yeah, absolutely. And, you know, overall, the stock market itself was up, I think, four-and-a-half percent yesterday. So there was a general sense on Wall Street. There was apprehension about what the settlement might be. If it turned out to be much bigger than expected, I think there was going to be fear that, you know, there might be more prosecutions. But I think this was a message that there was an attempt by the government to really put this all behind us, that this is going to be sort of the exclamation point in the financial crisis era. And there’s a belief on Wall Street that this is it, that we can—they’re going to move forward now, and there’s no more worrying about the government looking over their shoulder.

Transcript AND video at the link ---

[Blue_Tires]

1. ttt

[HCE SuiGeneris]

2. A pittance.

Also, a travesty. Accountability goes unchecked with deep pockets.

[Statistical]

3. Stock prices jump 7% and investors gain $7 billion.

Kinda shows you what "smart money" thinks about the outcome.

Had the fine been in line with expectations the stock wouldn't have moved or maybe moved marginally.
Had the fine been much worse than expectations the stock would have sank.

The stock exploded upward at close of trading, traded higher overnight and is still up today despite the overall market being down.

Yeah I would say investors believe (correctly IMHO) that big Gold got a slap on the wrist.

[Octafish]

4. Small fraction of 2009 GS Bonus

Taxpayer paid for that, too.