Wed, Feb 10, 2016
A A A
Welcome Guest
Free Trial RSS
Get FREE trial access to our award winning publications
Industry Updates

Hedge funds rally around Goldman Sachs, dismiss SEC case as ‘childish’ and all drama

Wednesday, April 28, 2010
Opalesque Industry Update – Embattled global investment bank Goldman Sachs found an ally in big names from the hedge funds industry, who described the U.S. Securities and Exchange Commission (SEC) charges against it as “childish” and all drama.

Activist hedge fund Ken Griffin of Citadel Investment Group said that the questioned disclosure around Goldman’s transaction with John Paulson, CEO of hedge fund firm Paulson & Co., that is being used to vilify the investment bank or to pass regulatory reform is incredible. “I don’t want to use the word childish… but it’s childish,” he told Reuters.

Bill Ackman, founder and CEO of Pershing Square Capital Management, defended Goldman Sachs and told CNBC that he does not believe the bank had committed fraud. “I don’t think the (Securities and Exchange Commission) has a good case. Having been the subject of investigation in the past … I don’t feel sorry for Goldman Sachs, but they’re not being treated fairly,” he said.He explained that it would be unethical for Goldman to disclose that Paulson was shorting the housing trade to any investors taking long positions.

The SEC filed securities charges against Goldman Sachs and one of its employees, Fabrice Tourre, for alleged material misstatements and omissions in connection with a synthetic collateralized debt obligations (CDO) that the bank structured and marketed. The synthetic CDO called ABACUS 2007-ACI, was shorted by John Paulson – a transaction that saw him earn around $1bn.

An unnamed senior London-based hedge funder told Fox Business that hedge funds are sticking with Goldman Sachs because nobody wants “to kill the golden goose.” The source told Fox Business, "People are not afraid to move the business to where they think it should be, regardless of who the counterparty is. But obviously nobody wants to upset Goldman ... at the moment they don't have any reason."

On Sunday, Berkshire Hathaway’s CEO Warren Buffet expressed confidence with his $5bn investment into Goldman Sachs. Berkshire’s director Thomas Murphy said Buffet is not concerned with his investment and remains comfortable with his working relationship with the investment bank.

Goldman Sachs’ CEO Lloyd Blankfein pledged to introduce reforms in the bank’s policies in the wake of its recent controversy. He made the promise during the nearly 11-hour hearing conducted on Tuesday by the U.S. Senate Permanent Subcommittee on Investigations, led by Senator Carl Levin. He told senators that "everything that's been the subject of criticism will be tightened up.”

At the same time, a senior lawyer representing Goldman Sachs said the judgment should be based on “merits and facts” rather than on a picture of Goldman as an “evil empire.”
-Komfie Manalo

Bg

What do you think?

   Use "anonymous" as my name    |   Alert me via email on new comments   |   
Today's Exclusives Today's Other Voices More Exclusives
Previous Opalesque Exclusives                                  
More Other Voices
Previous Other Voices                                               
Access Alternative Market Briefing


  • Top Forwarded
  • Top Tracked
  • Top Searched
  1. How Einhorn survived a nightmare year[more]

    From Bloomberg.com: Even when a hedge fund has an awful year, which was the case for David Einhorn's Greenlight Capital, there are lessons to be learned. Many funds would have had a tough time surviving a year like Einhorn experienced in 2015, when all the stars seemed to align against him and Green

  2. Legal - Hedge fund founder wins early release in U.S. insider trading case, Gramercy seeking $1.3 billion from Peru over land-bond dispute[more]

    Hedge fund founder wins early release in U.S. insider trading case From Reuters/Streetinsider.com: Former hedge fund manager Doug Whitman on Tuesday won a reprieve from serving the remainder of his two-year sentence for insider trading after several judges expressed skepticism that his 2

  3. Investing - David Einhorn finds a winner in Michael Kors[more]

    From Thestreetinsider.com: Greenlight Capital hedge fund manger David Einhorn took his lumps in 2015. The fund lost over 20 percent on the year amid bets gone bad being long a plunging SunEdison and short a couple high-flying FANG stocks. However, today Einhorn is again showing his stock picking pro

  4. Investing - Avenue Capital's Marc Lasry: We like European bank loans, Comment: A bunch of hedge fund managers are chasing the 'dream of crushing a major structural problem'[more]

    Avenue Capital's Marc Lasry: We like European bank loans From CNBC.com: European banks are under immense pressure, but at least one prominent hedge fund has found what it thinks is a good opportunity in the wreckage. Marc Lasry, co-founder and chief executive of hedge fund Avenue Capital

  5. Credit Suisse cherry picks hedge fund ideas[more]

    From FT.com: Credit Suisse Asset Management plans to cherry pick profitable concepts from hedge funds with the launch in Europe of a “best ideas” strategy. The investment arm of the Swiss bank said the strategy will separate it from other funds blighted by “overcrowding problems”. It comes at a time