A lot has been written about Goldman Sachs since the SEC allegations arose that Goldman Sachs committed fraud. Many facts regarding the cases are still unknown. Therefore, I do not want to dwell too much on the topic. However, I have a few important thoughts I wanted to add to the debate.
Many people know I have written many articles playing Devil’s advocate for Goldman Sachs. This is not because I think Goldman Sachs are angels, I merely believe they are no different than many other Wall Street firms that are as unethical as they are. When it comes to money people are greedy, whether it be the person on main street or wall street.
Goldman Sachs does awful PR and this has brought a lot of attention to the firm. I think this is one reason why Goldman Sachs has become the punching bag of the American people.
Dan Loeb's Third Point returned 11% in its flagship Offshore Fund and 13.2% in its Ultra Fund for the first quarter. For April, the Offshore Fund was up 1.7%, while the Ultra Fund gained 2.3%. The S&P 500 was up 6.2% for the first quarter, while the MSCI World Index gained 5%. Q1 2021 hedge Read More
I was interviewed by a large European Magazine devoted on Public relations. I gave some thoughts about how I think Goldman Sachs could improve PR which I believe they are doing an awful job until now(this interview was conducted well before the SEC allegations were released). The issue will come out in late May, and I will post a link once the issue is published.
In terms of timing, I think the Goldman Sachs news is highly suspect. Even, if they are guilty of fraud (in which case I think they should be fined and punished to the fullest extent of the law) it is very convenient timing for the release of the news. The news was released literally the week President Obama started pushing for financial reform. The SEC says that they had informed Goldman Sachs about the fraud charge nearly a year ago. I am not surprised the news was released after the health care debate and not during it. The SEC claims there was no contact with the administration regarding the timing of the news release. I believe an investigation should be launched into the matter to determine whether the SEC is telling the truth.
The thing that truly frightens me is the fact the SEC only went after Goldman Sachs. The SEC has sat on it’s hands for twenty years doing nothing. I laughed when Bill Clinton claimed that if Arthur Levitt was SEC chairman during the Bush administration none of these excesses would have happened. While I believe Arthur Levitt was a better SEC chairman than Chris Cox, Levitt did not uncover the Bernie Madoff scheme. Levitt also twiddled his thumbs while investment banks were issuing fraudulent IPOs of internet companies that were sold to investors who lost huge sums of money.
This brings me to why is the SEC only going after Goldman? There were many mortgage lenders that falsified documents of sub-prime borrowers to ensure they got loans. This is clear fraud that went on for many years, yet not there was no SEC action. The SEC has also taken no action against many financial firms which may have falsified their balance sheets. Many top executives claimed their firms were in perfect financial help when merely days later the firms collapsed. This was the case of many commercial banks, investment banks, insurance firms and others during 2007-2008. Again, no SEC action in these cases.When the Government starts to selectively punish certain individuals or even companies everyone should be frightened.