Fri, Mar 27, 2015
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. Other Voices: Does the hedge fund industry benefit society?[more]

    This article was authored by Don Steinbrugge, Chairman of Agecroft Partners, a US-based global consulting and third party marketing firm for hedge funds. It is no secret that the hedge fund industry is viewed negatively by a la

  2. Private credit comes into focus for investors[more]

    Bailey McCann, Opalesque New York: As investors look for a way out of the low yield/no yield environment, private credit is becoming an increasingly attractive asset class, according to a white paper from Bayshore Capital Advisors. Private credit has grown steadily since the financial crisis as

  3. M&A - Hedge funds no longer attractive targets for banks, reinsurers, Blackstone buys stake in Christopher Pucillo’s Solus event-driven hedge fund[more]

    Hedge funds no longer attractive targets for banks, reinsurers From Institutionalinvestor.com: Swiss RE, the world’s second-largest reinsurer, is looking to sell its 15 percent stake in Jersey, Channel Islands–based hedge fund firm Brevan Howard Asset Management. Morgan Stanley reported

  4. Opalesque Radio: Threadneedle expects continuing equity volatility this year[more]

    Benedicte Gravrand, Opalesque Geneva: Investors should expect more volatility, which is signaling a "slow moving" top to the market, KKM Financial’s founder and CEO Jeff Kilburg told CNBC on Monday. And this volatility is going

  5. Hedge funds show strong performance of 2.52% so far in 2015[more]

    Komfie Manalo, Opalesque Asia: The hedge fund industry got off to a strong start in 2015 "completely unmindful" of the poor performance last year, according to data provider Preqin. According to Preqin, following a year which saw the average he

 

banner