Goldman Withers in SEC Spotlight

Fraud charges kneecap stock price; observers play wait-and-see
By Marie Morris,  Newser Staff
Posted Apr 16, 2010 1:14 PM CDT
Goldman Withers in SEC Spotlight
A man walks past London evening newspaper billboards showing the latest headlines in London, Oct 23, 2008, when Goldman Sachs was about to shed about 10% of its worldwide workforce.   (AP Photo/Alastair Grant)

The SEC's civil suit against Goldman Sachs is hardly a slam-dunk, experts agree, but the scrutiny is certainly not doing the firm any good. Some reactions:

  • This "is explosive stuff," Felix Salmon blogs for Reuters. "Goldman Sachs has lost more than $10 billion in market capitalization today, in the wake of these revelations. Good. It can go long markets and it can go short markets. But it can’t lie to its clients."

  • Don't get carried away, Joe Weisenthal writes for Business Insider. The lawsuit isn't a blanket allegation. Goldman is "being charged for something very specific, that its employee Fabrice Tourre misled investors about who selected the assets, and what direction he was betting on."
  • "This litigation exposes the cynical, savage culture of Wall Street that allows a dealer to commit fraud on one customer to benefit another," one analyst tells MarketWatch.
  • "If any of this is potentially true, there would be direct beneficiaries in the financial space," another analysts tells CNBC. "If the mortgages and structures are in fact fraudulent, these guys would be potentially let out of agreements or contracts with Goldman."
(More Goldman Sachs stories.)

Get the news faster.
Tap to install our app.
Install the Newser News app
in two easy steps:
1. Tap in your navigation bar.
2. Tap to Add to Home Screen.