Goldman KO’s SEC

Posted by LK on 7/16/10 • Categorized as Blog, Business, Featured, Financial Markets, The Economy and Markets

From the WSJ:

The U.S. Securities and Exchange Commission has reached a $550 million settlement with Goldman Sachs Group that will resolve its lawsuit against the firm alleging that it misled investors in a subprime mortgage product, the agency announced Thursday.

Today’s delusional buffoon, one Robert Khuzami, the SEC’s director of enforcement, crowed about the settlement agreement:

”This settlement is a stark lesson to Wall Street firms that no product is too complex, and no investor too sophisticated, to avoid a heavy price if a firm violates the fundamental principles of honest treatment and fair dealing”.

A heavy price? Goldman paying $550 million for activities that required hundreds of billions in bailout money is a heavy price? What doesn’t even amount to annual bonuses for 50 top executives is a heavy price? With first quarter earnings alone of 3.3 billion dollars, $550 million is supposed to teach them, and teach them but good?

All you have to know to assess the severity of the penalty is that the market’s reaction to the announcement was to bid up the price of Goldman stock around 7%. Last I heard, a proper punishment should cause some strain to the guilty party, not give them reason to sigh in relief and break out the good Scotch. This fine was simply the price of doing business, and an indication to The Street that the most egregious violations of client trust will be met by a mild scolding and a gentle “run along”.

Meanwhile, the public relations department at Goldman was savvy enough to orchestrate the signing of the papers within an hour of the capping of the BP abomination, causing news of the settlement, which would otherwise have led the evening news last night and been the lead front page story in this morning’s papers, to take a back seat.

A back seat in a stretch limo.