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Goldman, Sachs Securieties Fraud Case - Research Paper Example
Finance & Accounting
Pages 8 (2008 words)
Goldman Sachs Fraud Case Author Institution Abstract The charging of Goldman Sachs with fraud centered on the theory that the firm had traded a German bank (IKB) a derivative debt instrument attached to the fate of mortgage-backed securities, while at the same time concealing the flaws of the securities in that subject…
Goldman Sachs Fraud Case Introduction Goldman Sachs defrauded investors by failing to reveal the apparent conflict of interest on mortgage investment it floated as the housing market became sour. The charges that were brought forward by the Securities Exchange Commission against Goldman Sachs argued of unlawful action and fraud in the trading of toxic subprime mortgage derivative securities. Nevertheless, Goldman Sachs affirmed that they were merely following normal business practices and had not committed any wrong. The Goldman Sachs fraud case elicited critical issues centering on the inadequacy of the investment banking practices, and raised the question whether it is a case of deceptive or unethical behavior (Craig & Scannell, 2010). The three-month legal ordeal erased close to $20billion of the firm’s stock-market value. A lively public discussion that followed the charge of Goldman Sachs by SEC centered on whether Goldman Sachs, broadly viewed as an embodiment of bubble-era greed, was also a lawbreaker. Questions emanated on whether Goldman bankers warranted condemnation for deliberately exploiting the naivety of investors to gain from the trading of debt instruments that were bets on a market Goldman Sachs was doomed to collapse (Whalen & Bhala, 2011). ...
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