Sun, Jun 24, 2018
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. Paper: The performance of stocks actively pitched by hedge funds[more]

    Using a novel dataset drawn from investment conferences from 2008 to 2013, I show that hedge funds take advantage of the publicity of these conferences to strategically release their book information to drive market demand. Specifically, hedge funds sell pitched stocks after the conferences to ta

  2. North America - US fundraising for special purpose acquisition vehicles hits record this year[more]

    From AFR.com: Special purpose acquisition vehicles (spacs) are hitting the US market at the fastest rate on record, attracting the likes of Goldman Sachs and hedge fund investor Daniel Loeb for the two largest such deals in 2018. Spacs have raised $US4.5bn so far in 2018, the largest amount fo

  3. Investing - Man Group and AQR try to take aim at private equity industry, Hedge funds poised to be winners in AT&T-Time Warner deal[more]

    Man Group and AQR try to take aim at private equity industry From FT.com: The popularity of private equity investments has prompted asset managers such as Man Group and AQR to devise strategies that aim to replicate PE returns but at a much lower cost to investors. Both companies a

  4. News Briefs: David Stemerman's hedge fund holdings shrank before his run for governor, nvestment manager TSW triggers succession plan, Alan Howard joins Peter Thiel investing in Cologne-based fintech startup[more]

    David Stemerman's hedge fund holdings shrank before his run for governor But the U.S. holdings of Stemerman's Greenwich hedge fund, Conatus Capital, shrank from $2.6 billion at the apex to just over $1 billion before he announced his move into politics. (Hartford Courant) Inv

  5. British Empire: Pershing's 23% discount 'unsustainable'[more]

    From Citywire: The wide discount on Pershing Square Holdings (PSH) is 'unsustainable' and puts star hedge fund manager Bill Ackman under pressure, says British Empire (BTEM). Pershing is the third largest holding in the £850 million British Empire trust, managed by Joe Bauernfreund, which sp