"Washington, D.C., April 16, 2010 — The following is a statement from SEC Chairman Mary L. Schapiro regarding SEC Office of the Inspector General (OIG) Report 526 — "Investigation of the SEC's Response to Concerns Regarding Robert Allen Stanford's Alleged Ponzi Scheme":
"This report recounts events that occurred at the Commission between 1997 and 2005. Since that time, much has changed and continues to change regarding the agency's leadership, its internal procedures and its culture of collaboration. The report makes seven recommendations, most of which have been implemented since 2005. We will carefully analyze the report and implement any additional reforms as necessary for effective investor protection."
I knew they were slow... but holy smokes! "Between 1997 & 2005"??? I apologize to those Internet ad turtles. They move like lightning compared to these guys. ROFLMAO
Federal officials on Friday accused Goldman Sachs Group Inc. (GS) and one of its executives of defrauding investors by peddling a financial product it knew was doomed to fail as the housing market collapsed.
The Securities and Exchange Commission said in the civil complaint that Goldman and Fabrice Tourre, then vice president, created and sold opaque collateralized debt obligations, or CDOs, that hinged on the performance of subprime mortgage-backed securities. The complaint charges that Goldman promoted these securities to customers, while failing to disclose that a major hedge fund client had a role in picking the securities and was betting against them.
Goldman Sachs, which in a statement called the accusations "completely unfounded in law and fact," could face steep fines and be on the hook to repay nearly $1 billion of investor losses. The charges mark the first action regulators have taken against a Wall Street firm for betting on the housing market's collapse, and represents another blow to an investment bank under attack by criticism about how it handled the financial crisis.
The hedge fund, Paulson & Co., paid Goldman $15 million to create the CDO in early 2007, when the U.S. housing market and related securities were beginning to show signs of distress, the SEC complaint said.
According to the SEC, Goldman Sachs failed to disclose that Paulson played a significant role in selecting the CDO's portfolio, but the firm then bet against it by entering into a credit default swap transaction with Goldman to buy protection on certain layers.
As a result of that bet, Paulson made about $1 billion, SEC said.
"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," said Robert Khuzami, Director of the SEC's Division of Enforcement.
THIS IS WHAT THE SEC SHOULD BE DOING. GO AFTER THE PYRAMID SCHEMES AND GS, NOT LITTLE OLD INNOCENT SPNG.