Has Goldman committed securities fraud? Perhaps surprisingly, it’s not altogether clear.
Securities law experts are split on the question. Goldman hasn’t been accused of lying to anyone. Instead, the SEC is arguing that Goldman violated the law by omitting a material piece of information in its marketing of these securities: namely, that they were designed by another Goldman client (Paulson & Co.) for the specific purpose of losing value. Goldman counters by noting that it disclosed all of the securities’ fundamentals, and that the investors purchasing these securities were just as capable of assessing their value and projected trajectory as was Paulson & Co.
Goldman’s argument, under existing US securities regulation, is not a frivolous one. But although Goldman’s behavior might be permissible under US securities law, it is most certainly impermissible under traditional notions of right and wrong. All the disclosure in the world does not absolve someone of the basic moral precept to do unto others as one would have others do unto you.
Read the full article at csmonitor.com.