The first loose thread of the tapestry of Wall Street fraud was given a good tug today as the SEC filed a civil suit against Goldman Sachs. The details of this scheme are such clear cut organized crime that it would make a good script for the Sopranos. The response from Goldman Crime Family is just to say “Heey, forget about it”, but this time the G-men aren’t going to do that.
Over the past thirty years when a Wall Street crime family actually got caught running a scam like this they would just enter into a Consent Decree with the SEC. They would pay a little money, blame on some over zealous associate (they’d promise to have him whacked) and declare it would never happen again. The boss of bosses would not be touched and the SEC would not reveal any detail of the operation the street crew had been running so they could run it again and again.
Today was different, instead letting them beat the rap, the SEC is planning to go to trial. They’ve got themselves a no nonsense judge who used to be a prosecutor. The deposisition of Goldman’s employees and subpoena of their records was apparently very interesting. It seems that “Fab” Fabrice Tourre liked to refer to himself in emails in the third person as “Fab” and recount his crimes and the “take” in much detail. “Fab” was given a promotion or was “made” on this two billion dollar boost.
Oh and flat-foot at the SEC was always good experience to become a mouth piece (I mean high paid lawyer) on Wall Street. The corporate media trotted out a couple of these Wall Street mouth pieces today and they were “experts” because they used to work for the SEC. The same SEC that never really enforced the law in the past. It was their informed opinion that the SEC would have a real-hard-time proving their case. The reason was that if it was an “easy” case to prove than Goldman would have taken a settlement. There is no indication that the SEC ever offered a settlement and fraud watchers are saying this is the just tip of the iceberg. You should expect many more civil suits from the SEC. The DOJ is mum of course, but AG Holder did tell the Senate earlier this week that they might see more fraud trials.
Goldman Sachs’s stock was down 13% today and dragged the DOW down 125 points even though Goldman is not a DOW 30 component. JPMorgan which is a DOW 30 stock, dropped 5% on the news that the days of organized crime (I mean free-market capitalism) may be over. The only fly in my “hopey, changey” optimism ointment stuff is that the Obama Adm is rife with former bosses from the Goldman Sachs family. www.prairie2.com