- Category: Frontpage Articles
- Last Updated: Monday, 01 May 2017 09:08
- Published: Wednesday, 05 September 2012 14:24
- Written by Matthew G. Yeager
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I am stunned that people are not more upset about this. You know, $8.7 billion of our money has gone missing in Iraq. I didn’t even know they had a Goldman Sachs over there. (Jay Leno) [i]
In April of 2010, the Securities and Exchange Commission filed a civil fraud complaint against Goldman Sachs and Company, and its employee, one Fabrice Tourre.[ii] In the words of one knowledgeable observer, this was the SEC’s “only major case against Wall Street since the crisis” (Sorkin 2010: 550). The complaint accused the defendants of making misleading and deceptive statements with respect to a debt instrument marketed by Goldman Sachs in 2007 that was based on subprime residential mortgage-backed securities.[iii] Undisclosed to investors was that a hedge fund called Paulson & Company was involved in the selection of assets which formed the basis for the new debt instrument, and paid Goldman Sachs a fee of $15 million to market the new instrument. Paulson thereupon took a short position against the very security it helped to market – a position which Goldman Sachs did not disclose to investors as required under the Security and Exchange Commission Acts of 1933 and 1934.