"This brand-new financial product is very complicated, but fraud and conflict of interest are simple and ancient. Goldman Sachs mistakenly allowed a customer who could profoundly affect the mortgage securities in its portfolio to short the mortgage market, and Goldman Sachs also provided false statements to other investors: the investment content of securities was selected by independent and objective third-party institutions. "
Robert Kuzami, head of the law enforcement department of the SEC, made the above statement in the indictment, saying that Goldman Sachs allowed customers who were interested in shorting to participate in deciding "which mortgage debt bond products to include in the portfolio", but claimed that this product was launched by an "independent and objective third party" when promoting it, which was suspected of misleading investors.
At the same time, fabrice Tolley, vice president of Goldman Sachs, was sued, and the SEC accused him of being mainly responsible for the fraud case, because the executive designed the above-mentioned transaction, was responsible for preparing marketing materials, and was responsible for direct communication with investors. The SEC believes that Torre knows Paulson's hidden short selling position and the company's role in asset selection.
However, the SEC indictment did not accuse John Paulson, the head of Paulson & Co., which was regarded as the most successful hedge fund manager in the financial crisis, of violating the law. Because he insisted on shorting the mortgage bond market before the financial crisis broke out, he made a personal profit of $3.7 billion in 2008 and became famous for a while. However, the SEC's prosecution makes the outside world wonder whether there is something else hidden behind the success of this "air force commander".
Wall Street stock market and futures market plummeted.
In response to the SEC's allegations, Goldman Sachs immediately countered. In a statement, the bank denied the alleged fraud, calling the SEC's allegations "groundless". The statement also stressed that Goldman Sachs itself lost as much as $90 million in related party transactions, and it "has no obligation" to explain the identity of the other party to the buyers and sellers of financial products.
Although Goldman Sachs firmly denied the accusation, its share price was still strongly impacted on that day. At the close, it fell by $23.57 to 160.7, plunged by 12.8% all day, and its market value evaporated by $654.38+02 billion overnight. At the same time, Wall Street banking stocks were also dragged down by Goldman Sachs. Among them, the share price of Deutsche Bank, which had business dealings with Paulson & Co., fell by 9.2%, and other important bank shares such as Citigroup, Bank of America and Morgan Stanley also fell by more than 5%. However, due to the collective plunge of banking stocks, the Dow Jones Industrial Average once fell below 1 1000, and finally closed at110/8, down 1. 13%.
In addition to the stock market, the news that Goldman Sachs was suspected of fraud also hit the commodity market. New york's main crude oil (80.9 1, -2.33, -2.80%) futures contract fell 2.4% on the same day, the biggest one-day drop in more than two months. New york's main gold futures contract (1 132.90, -4.00, -0.35%) also fell 2% to close at 1 137 USD/oz.
The reason why Goldman Sachs' "fraud gate" incident caused a strong reaction in the market is that the bank has not disclosed that it is under investigation by the SEC. According to American media reports, Goldman Sachs received a warning from the relevant person of the US Securities and Exchange Commission (SEC) nine months ago that it would file a lawsuit, but the investment bank did not disclose this information to investors in its routine announcement. In addition, the "fraud gate" incident of Goldman Sachs also triggered the Wall Street earthquake, because the market began to believe that the SEC was investigating the role of large investment banks and financial institutions in the financial crisis, because there were signs that they were still designing and selling financial products related to the housing market when there were signs of a decline in the housing market. "When the real estate market begins to show signs of weakness, the Committee will continue to investigate the operation mode of investment banks and other institutions related to the structural and complex financial products in the real estate market." Kenneth Rench, the head of the SEC's Structured New Products Division, made a statement in the indictment, which aggravated market concerns.
Local analysts in the United States believe that the "fraud gate" incident of Goldman Sachs has a great impact on Goldman Sachs and even Wall Street. Although the final result is likely to be that Goldman Sachs reached a settlement with the SEC and paid hundreds of millions of dollars, there may be more than one such case-because since the financial crisis, although there have been voices accusing Goldman Sachs of being responsible for the financial crisis, these accusations have no reasonable basis and have never led to investigation or prosecution. This means that the supervision of financial institutions in the United States will be stricter, rather than "more thunder and less rain." At the same time, as the financial crisis continues, more banks will face similar prosecutions in the future.
US President Barack Obama's statement on Saturday is also in line with this market expectation. In his speech, Obama urged the US Congress to adopt stricter financial supervision measures to prevent the United States from falling into economic crisis again.
"If we don't take action now, the system that caused the financial crisis will continue to operate with the same loopholes and drawbacks." Obama's tone is quite tough. "If we don't try to change the causes of the crisis, we are doomed to repeat the same mistakes."
Buffett lost $654.38 billion overnight.
Goldman Sachs' alleged fraud will also make investors doubt the credit of large financial institutions, because in the annual report published by Goldman Sachs earlier this month, lloyd blankfein, CEO of Goldman Sachs, wrote an eight-page letter to shareholders. In his letter, he repeatedly emphasized the principle of Goldman Sachs that "the interests of customers are above everything else". Obviously, the SEC's accusation is completely contrary to Goldman Sachs' self-assertion, and this contradiction will further shake investors' confidence in Goldman Sachs, prompting them to suspect that Goldman Sachs is also concealing the facts in other ways.
In addition to affecting investors' confidence, Goldman's alleged fraud also embarrassed many supporters, including Warren Buffett.
In fact, shortly before the Goldman Sachs fraud scandal broke out, Ronald Olson, the director of Buffett's flagship Berkshire Hathaway company, was still very fond of Goldman Sachs when interviewed by American media, saying that the investment of $5 billion in Goldman Sachs in that year strongly showed that they believed not only in the strength of Goldman Sachs, but also in its integrity.
Relevant information shows that in September 2008, shortly after the bankruptcy of Lehman Brothers and the emergency takeover of Merrill Lynch by Bank of America, Goldman Sachs Group agreed to sell Buffett $5 billion warrants, and agreed that Buffett would subscribe for Goldman Sachs shares at the price of $ 1 15 per share at any time in the next four years, and pay 10% annual interest for these warrants.
For more than a year, the share price of Goldman Sachs rose steadily after bottoming out, and Buffett's investment in that year gained huge returns, which made many people look at Buffett's investment in that year with appreciation. However, to the surprise of the stock god, this time Goldman Sachs was sued by the SEC for alleged securities fraud, and its share price also shrank sharply in an instant-according to the latest closing price of Goldman Sachs, Buffett's warrants were worth about $2.06 billion, and the loss reached $950 million overnight. What annoys Buffett even more is that the "fraud gate" incident of Goldman Sachs also poses a challenge to its reputation-is the stock god blind or is Goldman Sachs disguised too well? For all this, Buffett will give an answer at the Berkshire shareholders' meeting early next month.