Sunday, April 18, 2010

UK Prime Minister Cites "Moral Bankruptcy" Requests Special Investigation of Goldman; Germany Reviews Fraud Case; SEC's Case Hinges on Single Point

Now that the SEC has dropped a bomb on Goldman Sachs, the list of who wants an investigation and is about to file civil charges mounts by the hour. Prime Minister Brown is the latest in on the act.

UK Prime Minister Cites "Moral Bankruptcy" at Goldman Sachs

Please consider Brown Says He Wants Special Investigation of Goldman Sachs http://news.bbc.co.uk/2/hi/business/8628231.stm

Speaking on the BBC's Andrew Marr Show the Prime Minister described the situation as one of "moral bankruptcy".

Mr Brown said that the UK Financial Services Authority should launch an immediate inquiry in co-operation with the US regulator, the Securities and Exchange Commission (SEC).

"Hundreds of millions of pounds have been traded here and it looks as if people were misled about what happened. I want the Financial Services Authority to investigate it immediately."

The other two main parties have plans to reform the banking system. Among Conservatives plans is a strong push for an international agreement to stop banks engaging in large-scale trading using their own money

And the Liberal Democrats, which would have gone further than Labour's bail-out and nationalised banks, say they will separate banks' retail and investment arms.

Royal Bank of Scotland Lost $841 Million, UK Taxpayers Took The Hit

Goldman may owe British taxpayers $841m

British taxpayers have a direct material interest in the outcome of the fraud case brought against Goldman Sachs by the US financial watchdog, the Securities and Exchange Commission. http://www.bbc.co.uk/blogs/thereporters ... axpay.html

Because the bulk of the loss on the transaction at the heart of the charge against Goldman ended up with Royal Bank of Scotland, the bank where British taxpayers have an 84% stake.

The material fact to dwell on for now is that on 7 August 2008, just before Royal Bank was semi-nationalised, it paid out $841m to Goldman Sachs to settle a claim on credit insurance provided by ABN, the Dutch bank which Royal Bank had acquired (or to be more precise, it had bought a big bad chunk of ABN in the autumn of 2007).

Goldman then passed this $841m to the ultimate beneficiary of the insurance contract, the giant US hedge fund, Paulson & Co.

Now the SEC claims that the insurance contract would never have been written, and therefore the loss would never have fallen on RBS, if Goldman had told the truth about certain financially important elements of the investment product that was being insured.

Germany Reviews Legal Action Against Goldman Sachs

Inquiring minds are reading Germany Reviews Legal Action Against Goldman After Fraud Case http://www.bloomberg.com/apps/news?pid= ... Oxr8&pos=5

Germany may take legal action against Goldman Sachs Group Inc. after the U.S. Securities and Exchange Commission said it was suing the company on fraud charges, government spokesman Ulrich Wilhelm said. The German financial regulator, Bafin, “will ask the SEC for information,â€