"2 views of ex-trader presented at trial; Goldman Sachs also accused of role in debt crisis" by Tom Hays | Associated Press July 16, 2013
NEW YORK — Jurors at the trial of a former Goldman Sachs trader heard him described Monday both as an architect of a massive securities fraud and as a low-level scapegoat for the mortgage market meltdown that began in 2007.
Fabrice Tourre faces allegations from a 2010 lawsuit brought by the Securities and Exchange Commission against him and Goldman Sachs in what was called the most significant legal action related to the mortgage securities crisis that helped push the country into recession.
‘‘This is a case about Wall Street greed,’’ SEC lawyer Matthew Martens said in opening arguments at the federal civil trial. ‘‘It’s a case about lies, trickery, and deception. . . . In the end it was Wall Street greed that drove Mr. Tourre to lie and deceive.’’
Defense attorney Pamela Chepiga countered that her client ‘‘never misled anyone.’’
The SEC has accused Tourre of scheming to sell investors subprime mortgage securities that he knew were doomed to fail. The maneuver allowed the hedge fund Paulson & Co., and its billionaire president, John A. Paulson, to make $1 billion — and Goldman Sachs to make millions in fees — by betting against the investment.
Related: Inside Job
Tourre ‘‘abused his position of responsibility to help an important hedge fund client make $1 billion,’’ Martens told the nine jurors.
Martens cited an e-mail Tourre sent to his girlfriend in France saying, ‘‘The whole building is about to collapse any time now,’’ but that ‘‘the Fabulous Fab’’ would survive.
‘‘This case is about holding Fabrice Tourre, the so-called Fabulous Fab, accountable,’’ he said.
The defense claimed the e-mail was really ‘‘an old-fashioned love letter’’ penned by a young trader who was full of self-doubt and angst over upheaval in the financial world.
‘‘He’s saying, ‘There’s nothing fabulous about me,’ ” Chepiga said.
The case ‘‘is not about whether you approve or disapprove of Wall Street,’’ she added. ‘‘You all took an oath to decide this case on the facts before you. . . . Mr. Tourre has chosen to fight to clear his name.’’
Both Chepiga and the SEC lawyer said Tourre will take the witness stand.
‘‘He looks forward to telling you what happened here,’’ she said.
Tourre was born in France and moved to the United States in 2000 to study at Stanford University. He obtained a graduate degree in science before going to work for Goldman Sachs.
The suit seeks a declaration that Tourre violated securities laws, along with a disgorgement of profits and unspecified penalties and damages.
In July 2010, Goldman Sachs settled charges brought against it in the matter and agreed to pay $550 million. The bank still faces private litigation, including a federal securities class-action lawsuit.
Related: AIG's Beneficiary
That's easy: taxpayers
The SEC’s first witness was an expert on mortgage-backed securities. He was to resume testifying on Tuesday morning.
The trial is expected to last three weeks.
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Look who picked up his defense bill.
"Ex-Goldman trader faulted in SEC case" by Susanne Craigand Ben Protess | New York Times August 02, 2013
NEW YORK — A former Goldman Sachs trader at the center of a toxic mortgage deal lost a courtroom battle Thursday, giving Wall Street’s top regulator its first significant victory in a case stemming from the financial crisis.
A jury found the trader, Fabrice Tourre, liable for civil securities fraud, delivering the Securities and Exchange Commission a long-sought courtroom victory in its uneven campaign to punish Wall Street over the crisis.
Tourre’s three-week trial in US court in lower Manhattan offered both sides — the government and Tourre — a shot at repairing their bruised reputations.
For the SEC, an agency dogged by its failure to thwart the crisis, the case offered a shot at redemption following one courtroom disappointment after another, including two similar cases that crumbled last year. For Tourre, who abandoned his trading career to pursue a doctorate in economics, the threat of being barred from Wall Street came second to the black mark on his name.
The SEC threw innumerable resources at Tourre’s case, underscoring its importance to the agency. Five years after Wall Street risk-taking nearly toppled the economy, the SEC has taken only a handful of employees to court in connection with the crisis; most cases have been settled.
Related: "Among the most significant arguments is that the government should not have been allowed to use certain wiretap evidence during the trial."
Some are even above the NSA, fellow Americans.
*****************
Yet even with the triumph over Tourre, the SEC could still face scrutiny. Some critics have questioned why the agency chose to make Tourre — a midlevel employee who was stationed in the bowels of Goldman’s mortgage machine — the face of the crisis. Rather than aim at a high-flying executive, the agency pursued someone barely known on Wall Street.
I'm sure the double entendre was unintentional.
Those concerns echo another SEC crisis-era case, in which a jury cleared a midlevel Citigroup employee, questioning why the agency had declined to charge more senior executives at the bank.
“There are bigger fish out there swimming fat and free, and they made a lot more money from the mess than Tourre ever dreamed of making,” said Erik Gordon, a professor of law and of business at the University of Michigan....
They are the ones in charge of society and thus too big to jail.
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"Ex-Goldman trader faces $825,000 fine" by Jennifer Peltz | Associated Press March 13, 2014
NEW YORK — A once high-flying Goldman Sachs trader dubbed ‘‘Fabulous Fab’’ was ordered Wednesday to pay more than $825,000 in one of the prominent cases stemming from the mortgage meltdown that helped spark the Great Recession.
Ruling in a civil case that regulators called a symbol of ‘‘Wall Street greed,’’ US District Judge Katherine Forrest decided Fabrice Tourre should pay a $650,000 penalty and give up more than $175,000 of his $1.5 million-plus bonus for 2007.
The case was considered one of the most significant legal actions related to the collapse of mortgage-backed securities, the subsequent financial crisis, and the conduct of Wall Street banks that sold the securities. Tourre was found liable after a trial last summer.
Tourre, now a doctoral student in macroeconomics at the University of Chicago, said he was weighing his next move in what his lawyers have depicted as a case of scapegoating....
The Securities and Exchange Commission, which sued Tourre, had asked for higher penalties but hailed the decision nonetheless....
The SEC initially also sued Goldman, which settled in 2010 by paying a record $550 million fine without admitting or denying wrongdoing. The bank declined to comment Wednesday.
The SEC said Tourre, a French-born Stanford University graduate who became a Goldman vice president, duped institutional investors about subprime mortgage securities that he knew were fated to sour.
His deceit cleared the way for a valued Goldman hedge fund client, Paulson & Co., to cash in by betting against the investment, the SEC said. While the investors lost close to $1 billion, Paulson — headed by billionaire John A. Paulson — made $1 billion, and Goldman garnered millions of dollars in fees.
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It's a rigged game the whole way:
"Hedge fund conference" by Peter Lattman | New York Times, May 10, 2013
LAS VEGAS — The SALT hedge-fund conference, held over four days at the Bellagio resort, is a lot of things: It’s an ideas conference, a Wall Street bacchanal, a power-networking event.
It is also, with its vaunted lineup of speakers, a place to absorb the musings of senior Wall Street money managers and Washington politicos. On Wednesday and Thursday, panelists weighed in on everything from the risks of the situation in Syria to investment opportunities in the shipping industry.
A keynote speaker was John Paulson, the billionaire manager who has recently absorbed steep losses across a number of his strategies. Paulson urged investors to have a long-term horizon and stick with hedge funds....
He is having a nice tourre.
The speakers, unsurprisingly, did not focus on the mediocre performance of hedge funds. (Hedge fund averages have underperformed the broad stock market indexes over the past four years.) The industry’s hefty fees were also, for the most part, a topic non grata.
But in a panel on the evolution of hedge funds, Jane Buchan, chief executive of Pacific Alternative Asset Management Co., expressed surprise that hedge-fund fees continued to rise. ‘‘I keep waiting for fees to go down, but they’re only going up,’’ she said.
There was much focus on fixed-income trading strategies, which have been among the hottest hedge-fund sectors. A panel on mortgage securities included Joshua Birnbaum, the former Goldman Sachs trader at the center of the bank’s hugely profitable and controversial negative bet on mortgages during the financial crisis. Birnbaum, now chief investment officer of the hedge fund Tilden Park Capital Management, said the market had gone through a fundamental change in how managers analyze mortgage-backed securities.
After the financial crisis, Birnbaum said, investors were making money by blindly plowing money into deeply distressed mortgage securities....
Birnbaum said, huh?
In a session on the global economic environment, Michael Novogratz, president of Fortress Investment Group, said Japan is the world’s most exciting place to invest, with the opportunity to make huge profits. He also joked about the country’s revolving-door leadership.
“I moved to Japan in 1992,’’ Novogratz said. ‘‘I think they have had 25 prime ministers since then, and they all look alike and act alike, and it’s very difficult to tell one from the next.’’
Isn't that a bit racist?
He said his outlook on the troubled eurozone remained grim. ‘‘I am optimistic about many things, but Europe is not one of them,’’ Novogratz said.
On Wednesday night, attendees put concerns about Washington gridlock and Wall Street regulation aside at a Latin-themed poolside fiesta.
Related: Betting on Scott Brown
I wonder if they had a a winged woman dressed in a sequin top and bikini bottom playing a see-through violin from a balcony perch last year.
Yet the conference center was filled at 8 a.m. the next day for a rollicking session featuring the Republican operative Karl Rove and a former Massachusetts congressman, Barney Frank, debating policy. The panel’s moderator asked whom they would like to see as the Federal Reserve’s next chairman.
‘‘Milton Friedman,’’ Rove quickly responded. ‘‘But he’s dead.’’
No use Yellen about who is now because they are all the same.
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Related: Steinway accepts Paulson’s $512m takeover offer
He never even said he was sorry.
"Goldman offers to speed metal delivery" by Gretchen Morgenson | New York Times August 01, 2013
NEW YORK — Goldman Sachs has offered to speed delivery of aluminum stored in warehouses that it controls as federal authorities examine how delays at the facilities have driven up the price of the metal.
Under scrutiny for the long waits that have cost manufacturers — and ultimately consumers — many millions of dollars, Goldman said on Wednesday that its warehouse unit, Metro International Trade Services, would give customers who store aluminum at the warehouses immediate access to their metal.
Oh, thank you so very much for letting us have what is ours and what we gave you the privilege of keeping for us!
Through Metro International, Goldman stores vast amounts of aluminum in and around Detroit. An investigation by The New York Times found that Metro routinely shuffled tons of the metal from one warehouse to another, a tactic that profited Goldman but pushed up the US aluminum prices.
Related: Goldman Sachs Shuffle $pinning the Wheels of Profit
Looks CRIMINAL to ME!
Goldman also said on it would suggest ways to improve the metal storage system, whose rules are dictated by the London Metal Exchange.
Regulators at the Commodity Futures Trading Commission are examining practices at warehouse operations controlled by financial firms and trading houses such as Glencore Xstrata, Noble Group, and Goldman. These operations store aluminum for companies like Coca-Cola and MillerCoors, as well as for speculators.
Congress has also taken an interest in the issue. Earlier this month, the Senate Banking Committee convened hearings on Wall Street’s push into the physical commodities markets and whether its involvement had raised prices.
Goldman said its offer to speed delivery of metal was open only to industrial customers of its Metro warehouses. If a customer wants immediate delivery of its metal, Goldman said, it would go into the open market and buy the amount requested, then swap it to the customer. Goldman said it would pay the difference between the market cost and the higher price that includes the storage premium. Goldman said none of its customers had taken up its offer yet.
Un-frikkin-real!
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What $cum!
"Goldman Sachs, LME sued over aluminum storage; Monopolistic behavior alleged to push costs up" by Kelvin Chan | Associated Press August 06, 2013
HONG KONG — The London Metal Exchange and Goldman Sachs are being sued in a US court over alleged anticompetitive and monopolistic behavior in aluminum storage.
The metal exchange will fight the class-action lawsuit, which its management believes is without merit, said the Metal Exchange owner, Hong Kong Exchanges and Clearing Ltd., in a prepared statement late Sunday.
Wall Street banks are facing increased scrutiny of their involvement in businesses that store and transport commodities such as oil and aluminum.
The LME and Goldman Sachs Group Inc. are named as codefendants in the suit, alleging ‘‘anticompetitive and monopolistic behavior in the warehousing market in connection with aluminum prices.’’
The lawsuit was filed Aug. 1 by lead plaintiff Superior Extrusion Inc., a maker of aluminum tubing and beams, in US District Court for the Eastern District of Michigan.
A growing number of buyers have complained about rising metal prices stemming from long waiting times at warehouses.
To address those concerns, Goldman said last week that it is taking measures to make more aluminum immediately available to customers at its metal storage business, Metro International Trade Services, which operates under LME regulations.
The bank pointed out last week that ‘‘the overall delivered price of aluminum is down nearly 40 percent since its 2006 peak levels.’’
Hong Kong Exchanges, which operates the southern Chinese city’s stock exchange, last year bought the LME, which approves and licenses a network of more than 700 metal storage facilities in 40 locations across the United States, Europe, and Asia.
Last month a US Senate committee held a hearing into whether banks should be allowed to control power plants, warehouses, and oil refineries.
Don't they already control enough? What more do you need than the money supply? They need a piece and cut of every movement, don't they?
The raw greed is disgusting.
JPMorgan Chase & Co. said last week that the possibility of new regulations was a factor behind its decision to consider selling some of its physical commodities business, which includes metals and energy. It has agreed to pay $410 million to settle accusations by US regulators that it manipulated electricity prices.
How many billions did they make off that scheme?
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"Aluminum foiled | October 22, 2013
Aluminum is everywhere, from soda cans to car bodies, but news reports indicate that consumers have been paying too much for it. This summer, The New York Times reported that the Goldman Sachs subsidiary Metro International Trade Services — a warehousing firm — was stretching out the time it takes for aluminum buyers to receive their metal. This slowdown has allowed Metro International to collect additional warehousing fees. According to the Times, market insiders estimated the practice cost US consumers over $5 billion over the last several years. Major aluminum consumers such as Coca-Cola and brewer MillerCoors LLC are calling on Goldman Sachs, the formidable investment bank, to speed up the lines at its subsidiary’s warehouses. A Senate hearing on the issue was expected early this month, but apparently was delayed by the government shutdown.
Long waiting times are only a symptom of a larger problem facing the commodities market. Before 2003, the companies that made money speculating on commodity values and the companies that provide services — such as warehouse space — to consumers of these commodities had to be separate. But since a Federal Reserve ruling a decade ago, financial institutions have been able to buy and trade commodities, while also holding companies such as Metro International. Such combos have both the means and a financial incentive to create artificial scarcities. In 2010, J.P. Morgan was accused of manipulating the market to increase the value of copper it owned. Only under intense pressure from regulators did the company announce it would be exiting the physical commodities market.
Due to the havoc wreaked on the aluminum market by Goldman Sachs, the Federal Reserve has begun examining the consequences of allowing Wall Street institutions into the commodities arena. All players in the commodity market are best served by a system that is transparent and efficient.
They haven't even written rules for Dodd-Frank yet and that was five years ago.
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Were there ever any criminal charges or even a settlement because I never saw anything in my Globe.
Also see: Goldman Sachs paid CEO Blankfein $19.9 million
I suppose it's just a web glitch that it didn't make the printed piece, 'eh?
"Goldman Sachs on Wednesday reported a fourth-quarter profit of $2.89 billion.... Goldman Sachs Group’s earnings fell in the first quarter to $1.95 billion.... Goldman Sachs said Tuesday that its second-quarter profit doubled to $1.9 billion.... Another tough quarter for Goldman Sachs. Its net income in the April-through-June period: $962 million."
Yeah, real tough quarters for Goldman. $orry to be such a dragon and downgrade the party.
Goldman Sachs said second-quarter profit amounted to $2 billion
That was this year and about settles it. They found a new way to invest proving they love you after all.
Goldman Sachs said second-quarter profit amounted to $2 billion
That was this year and about settles it. They found a new way to invest proving they love you after all.
