Goldman Sachs Group Inc was charged with fraud on Friday by the U.S. Securities and Exchange Commission in the structuring and marketing of a debt product tied to subprime mortgages.Needless to say, GS stocks are down sharply today. And while Goldman Sachs is the most egregious of the big financial firms that played the roulette wheel with trillions in taxpayer-backed dollars, it's not the only company that deserves fraud charged leveled against it.
The SEC alleged that Goldman structured and marketed a synthetic collateralized debt obligation that hinged on the performance of subprime residential mortgage-backed securities, and which cost investors more than $1 billion.
It alleged that Goldman did not tell investors "vital information" about the CDO, called ABACUS. This included that a major hedge fund, Paulson & Co, was involved in choosing which securities would be part of the portfolio, and had taken a short position against the CDO in a bet its value would fall.
According to the SEC complaint, Paulson & Co paid Goldman $15 million to structure the CDO, which closed on April 26, 2007. Little more than nine months later, 99 percent of the portfolio had been downgraded, the SEC said.
The SEC said Goldman Vice President Fabrice Tourre was principally responsible for creating ABACUS. It also charged him with fraud.
More of this, please. If it's good enough for Bernie Madoff, it's good enough for these jokers.
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