httpv://www.youtube.com/watch?v=6v5VahaEL7s For over a year, accusations of Goldman Sachs’ (GS) unethical behavior has been strictly hot air exchanged by talking heads and Goldman staff. However, now the Securities and Exchange Commission has stepped up to the plate and charged the investment bank with fraud.
Robert Khuzami, director of the division of enforcement, stated:
Goldman wrongly permitted a client that was betting against the mortgage market to heavily influence which mortgage securities to include in an investment portfolio, while telling other investors that the securities were selected by an independent, objective third party.
This charge comes as a huge shock to both Goldman and all the conspiracy theorists (myself included) who figured Goldman has too many connections to ever take a hit. Well, I am pleasantly surprised we were wrong.
Coupled with the recent allegations against former Lehman Brothers CEO Dick Fuld, we may actually see the financial terrorists get thrown in prison. If so, this truly may be one of the next major signs of economic recovery. Remember: when Jeffrey Skilling and Dennis Kozlowski hit the slammer, markets were able to climb to new levels.
This new storm cloud should hang over GS shares for a long time to come. But for now, traders on Goldman’s elite desks better start manning the stations to protect the mother ship: