GS also took JC and the Healy administration for a ride also - remember those abatements when they cried poor..............Welcome to JC, the chump city!

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Hedge funds don't have clients, they have investors. In other words, the hedge fund managers and the investors have the same interest.TO MAKE MONEY

Goldman settles over naked short-selling claims
By MARCY GORDON Associated Press
May 4, 2010, 10:26PM

WASHINGTON ? Goldman Sachs has agreed to pay $450,000 to settle regulators' allegations that it violated a rule related to short-selling of stocks in 2008-2009, it was announced Tuesday.

The banking company did not admit or deny wrongdoing in paying the civil penalties in agreements with the Securities and Exchange Commission and the New York Stock Exchange's regulatory arm.

The case involving Goldman's stock-trading business is unrelated to the SEC's civil fraud charges filed against the firm last month over mortgage securities transactions it arranged. Goldman has denied the allegations in that case and said it will contest the charges in court.

The rule in the short-selling case involves naked short-selling and was installed by the SEC at the height of the market distress in the fall of 2008.

Short-sellers bet against a stock, in a practice that is legal and widely used on Wall Street. They often borrow a company's shares in a short sale, sell them, and then buy them when the shares decline ? pocketing the difference in price. Naked short-selling occurs when sellers don't own or borrow the shares before selling them, and then look to cover positions sometime after the sale.

The SEC rule includes a requirement that brokers must promptly buy or borrow securities to deliver on a short sale.

In the case involving the brokerage subsidiary, Goldman Sachs Execution & Clearing, the SEC and the NYSE regulators alleged that it failed to procure shares to cover its customers' short positions in the time required.

The SEC also censured Jersey City, N.J.-based Goldman Sachs Execution & Clearing in its administrative proceeding in the case. Censure generally brings the possibility that the firm could face a stiffer sanction if the alleged infraction is repeated.

While Goldman neither admitted nor denied the allegations, it did agree to refrain from future violations of the short-selling rule.

?This was the result of a manual processing error following the change in? requirements under the short-selling rule, Goldman spokesman Ed Canaday said. ?There was no financial impact on our clients. We now have improved, automated processes in place to avoid future errors.?

The SEC put in the rule as a temporary emergency measure at the height of market turmoil in October 2008 as the financial crisis struck with full force. The rule expired in July 2009 but the agency made it permanent that month.

Under the rule, brokers acting for short sellers must find a party believed to be able to deliver the shares within three days after the short-sale trade. If the shares aren't delivered within that time, there is deemed to be a ?failure to deliver.? Brokers can be subject to penalties if the failure to deliver isn't resolved by the start of trading on the following day.

A man walks up to a bar and says to the barman, "You see that glass at the end of the bar? I'll bet you $100 I can piss into it from here." The barman figures this be the easiest hundred bucks he will ever make and says, "you're on!" So the man whips it out, takes aim, and completely fails to get a single drop anywhere even near the glass. he then happily pays up. As the barman pockets the money, he says, "You didn't even come close, why would you make such a stupid bet?" The man replies, "See that idiot over there in the corner, banging his head against the wall? I just bet him $1,000 that you would let me piss all over your bar!" And that, my friends, is the story of Goldman Sachs. Not only did Goldman Sachs profit on betting against CDO's that they themselves designed to fail; more importantly, they insured them through AIG, which lead to our bailing them out to the tune of 182 billion! This is criminal folks, these crooks are NOT TOO BIG TO JAIL!

property investment used to be the safe bet, but that to was affected by greed and the banks.

with the US regulators on a reactive force, international investments are the way to go...........homework in other countries and their checks, balances and regulations is where my money is.........I don't have heaps, but I sleep at night knowing that the regulators that watch over my money are proactive.

Basically the US is not a safe place to invest - China is a far better option ! Government regulators don't f**k around

You need to do some serious reading if you think that the banksters "are not stealing from us" every single day. Including today and tomorrow also. These Wall Street criminals, banksters, gangsters, crooks, whatever name I'd like to call them, have leveraged OUR LIVES to the tune of over 500 TRILLION DOLLARS! You can blame the people all you want for bullshit "entitlements, welfare, food stamps, living beyond their means, blah, blah, blah," but the truth of the matter is that CORPORATE WELFARE is destroying this country, not the people. When companies like General Electric, Exxon, Mobil, announce that they are paying NO TAXES this year and actually getting billions back in refunds, it means you need to read a book sometimes. Oh, by the way, I read that. That being said, it is noted that only 3% of Americans read books, yourself excluded, of course.

N.J. coalition against sending state subsidies to Goldman Sachs and other corporations

Wednesday, 21 April 2010 17:08

Wednesday in Jersey City, the Better Choices for New Jersey Campaign held a press conference outlining the nearly $58 million in taxpayer dollars the state has provided to financial giant Goldman Sachs through the Business Employment Incentive Program (BEIP) and estimated that the state could pay as much as $18 million in additional subsidies this year. The Better Choices Campaign called for a suspension of BEIP for one year, a move they said would save the state an estimated $201 million in one of the toughest budget years in state history.

"Giving funds that could be used for property tax relief, to prevent transit fare or tuition hikes, or preserve vital services for working families to financial giants like Goldman Sachs and Merrill Lynch is unconscionable when working families are struggling under the weight of this recession," said Margarita Hernandez, Interim Executive Director of the New Jersey Working Families Alliance and coordinator of the Better Choices for New Jersey Campaign.

BEIP was spearheaded by the Whitman administration in 1996 and is administered by the New Jersey Economic Development Authority. The subsidy program offers cash grants to corporations that either relocate to or expand in New Jersey. The size of the grant is contingent on the number of jobs created or relocated into the state, and can be equal to anywhere from 10-80 percent of the income taxes withheld by the corporation for their employees.

Coalition spokespersons maintained that the flaws of BEIP are particularly noticeable in the case of Goldman Sachs, which has to date received funds from two different grants over a period stretching from 1997 to the present ? for a total of $57,967,304 over the last twelve years.

In 2006 and 2007, the firm reported to Jersey City that only 8.6 percent of its 2,567 workers at 30 Hudson Street were local residents. A Goldman Sachs executive explained to the Jersey Journal in 2007 the relatively small number of local hires by saying that most of the 30 Hudson Street employees had been with the company in New York City. Goldman Sachs has been awarded four BEIP grant from New Jersey ? but the firm has only received payouts from two of those grants. For these BEIPs, Goldman so far has received the highest possible percentage for a BEIP grant ? 80 percent of the income taxes for those workers moved to or hired in New Jersey. For the 1997 grant, the average salary was $72,000 per year. For the second grant in 2000, the average salary was $216,000.

"Corporations like Goldman Sachs are happy to take state subsidies, but they already make such large profits that those subsidies make very little difference in how they make decisions. What really draws businesses to a particular location are the fundamentals like the quality of the workforce, strong universities and a robust transportation system. Jersey City's shoreline was already an attractive location to Goldman Sachs before they received BEIP grants or any other public inducements," said Sarah Stecker, Policy Analyst at New Jersey Policy Perspective, a nonpartisan organization that studies state issues.

The coalition also noted that Goldman Sachs receives separate subsidies from Jersey City through property tax abatements on its 30 Hudson Street and 50 Hudson Street properties, and as a result will not suffer from the expected increase in property taxes due to cuts to municipal aid. The company also received $10 billion in federal funds through the Troubled Asset Relief Program in 2008.

Tuesday, Goldman Sachs reported a 91 percent increase in quarterly earnings for a total of $3.46 billion.

Advocates contrasted these record profits with the economic crisis currently facing the state. Governor Christie's draconian FY 2011 budget attempts to close a multi-billion dollar deficit by deferring $848 million in property tax relief, cutting school aid by $821 million and municipal aid by $445 million, and by making deep cuts across the board to transit, higher education, affordable health care and libraries.

It also includes over a billion dollars in tax breaks for the rich and corporations by declining to renew FY 2009's rate increase on residents making over $400,000 per year and allowing the 4% surcharge on the Corporate Business Tax to expire.

Daniel Santo Pietro, Public Policy Chair for the Latino Action Network, described the impact of the proposed cuts on working families. "This is a brutal and regressive budget. For all his talk about shared sacrifice, Chris Christie seems to ask more of everyone except the rich and corporations like the one in the tower behind us," said Santo Pietro.

The Better Choices for New Jersey Campaign represents over 55 organizations and was formed in 2008 to fight for a fair share budget that invests in quality education, affordable health care, infrastructure and our environment. Many of its revenue proposals were adopted for the FY 2010 Budget.

This year Better Choices for New Jersey has unveiled a multi-tiered plan to raise $3 billion in additional revenue that could mitigate cuts that impact working families.

The first proposal would suspend the BEIP program to save an estimated $201 million in funding. The second would restore last year's rate increase on residents making over $400,000 per year to net $1 billion. The third would extend the current 4 percent surcharge on the corporate business tax set to expire in FY 2011 and raise it to 8 percent for an additional $160 million in funding.

The Better Choices revenue plan would also close corporate tax loopholes by reinstituting the throwout and regular place of business rules and implementing a plan of combined reporting for corporations and their subsidiaries.

Increasing registration fees on gas guzzling vans and SUVs that weigh over 5,000 lbs would net an estimated $140 million. Better Choices also supports bringing gas revenues more in line with surrounding states by implementing a ten cents per gallon gas tax increase for $450 million or a 7 percent sales tax on gas for $900 million.

In total, the Better Choices revenue plan would generate $3 billion in critically needed funds.

"Chris Christie may talk the talk about shared sacrifice, but our proposals walk the walk by asking corporations and the wealthy to pay their fair share instead of balancing the budget on the backs of working families," said Hernandez.

? ANDY LAGOMARSINO, NEWJERSEYNEWSROOM.COM

Agreed, but do you really trust a federal regulator to be much better? Any system that requires the government to outsmart the banks on synthetic derivatives just isn't going to be effective.

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Rating agency ratings are of dubious value. They almost always lag/miss economic reality. Just look at the range of market yields for equally rated instruments.

While not color coded, there are already ratings for the risks in securities down by private firms like Moody's and S&P. I don't think the government getting involved in taking that role is even on the table. Perhaps the CPA would if implemented, but I doubt they would rate anything except in the most general sense (stock = risky, tbills = safe).

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Less regulation. Except for disclosure requirements, most government regulations either a) can't prevent outright fraud, b) entrench the largest firms at the expense of smaller companies, c) perptuate/exacerbate the too big to fail problem, d) put taxpayers on hook for bets taken by big financial players, e) can be easily circumvented by high paid lawyers, lobbyists and accountants, f) I could go on if I wanted to take the time.

When it comes to financial markets, the yield/ROI/etc is the primary measure of risk. If the government really wanted to help the retail level saver, they could adopt a color coded scheme for risk, like Homeland Security does:

Green - yield less than t-bills - safe for everyone
Yellow - yield btwn t-bills and investment grade corporates - only those willing to take some risk should participate
Red - everything else - be prepared to lose everything

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There isn't, at the moment. The Obama administration is working on regulations but there is a fine line when it comes to how much regulation is too much.

Risk is one thing, fraud is another. People know there are risks but assume there is enough regulation to protect them from all out fraud i.e. the fraudulent AAA ratings given to these garbage securities being marketed by Goldman and other fraudsters. They knew they were garbage, that's why they were betting heavily against them. I'm in favor of better more effective regulation, not more.

stani - both. The lawmakers rushed to get the bailout package passed and did not even think to put in restrictions.

Most of the banks have already repaid the bailout funds - with interest. I do think the banks should be on the hook for AIG but again - the government passed the package without specifying any of this.

Without clients, these banks wouldn't be in business. Which is why you cannot solely blame banks, or call these bankers thieves. People still have an appetite for risk or most of the funds available today would no longer exist.

Question to those in this forum... Do you support more government regulation over the financial services industry, or less?

Frog walk...perp walk....frog walk...perp walk....perp walk....frog walk!! LET'S DO it. I'll buy the popcorn!

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In all of these examples, the govt's actions were explicitly designed to help the financial industry. To paraphrase you, the govt wanted the financial industry to "steal" from taxpayers. So who should taxpayers blame for this, the financial industry or the govt?

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Exactly. They were the cops on the beat to keep the game honest, and they took the payoff. Had they done their jobs little of this would have happened, since the bonds would have been rated less than junk. They need to pay the price Anderson did for it's part in Enron. Corporate capital punishment, not some wrist slap, which they haven't even gotten.

But the current charges go beyond that to outright fraud, if the allegation is true that they let the guy shorting the issue pick the loser mortgages to put in it.

BoKEN2JC said:
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The private system set up to assess and abate risk failed. Which means capitalism failed. Without trust that you're not being setup for a fleecing no one would invest their money. Regulation to create that trust is as necessary a function of government as protecting our borders, it's not socialism by any definition. Imagine our banking system without the FDIC, we'd be back to cash under the mattress.

I've said it before, Wall street is little more than a casino, but if any casino operator spent as little as we do per dollar bet on security for our capital markets, they'd be out of business.

Tbird - very valid points. I was disgusted when the banks accepted money and then refused to lend. But the government basically loaned them this money and didn't put many restrictions on it - the government didn't require the banks to loan it. And the government should not have trusted these banks to "do the right thing". Of course the banks only have profits in mind.

I was very disturbed when the banks doled out huge bonuses instead of hiring back some of the thousands of people they laid off. But saying the banks are stealing money? Yes, they cried to the government but lawmakers did not have to give in. If the bailout package was put on the ballot for the public to vote for, it never would have passed. Lawmakers are supposed to represent the public's interests but we all know they never do.

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So when the government announced last year it was going out into the market at some future date to buy up at a favorable price the toxic crap that was sitting on the bank's balance sheets - and the banks went out and loaded up further on this crap in advance of the govt. purchase to maximize their gain - you don't see that as the banks stealing from taxpayers?

Or when bailout money is run through AIG to make its counterparties whole (the largest being Goldman but also including a FRENCH bank and a SWISS bank) - sophisticated counterparties who understood the risks of the positions they were taking - you don't see that as the banks stealing from taxpayers?

Or when the FED cuts interest rates to zero and essentially removes limitations on bank borrowing to provide incentive for banks to lend - but they refuse to lend and instead buy treasuries to capture a free four point spread - you don't see that as the banks stealing from taxpayers?

Is it an issue of semantics - Is there a more sanitary euphemism you'd prefer? That crap about the "irresponsible borrowers" creating this mess is a complete red herring. Ask yourself this - the entire amount of bad mortgage debt in late 2008 was less than $500 billion. Why has it taken trillions to try to undo the mess?

jcmee, I guess my point is that no one is complaining when they are making the large returns, but there is an outcry when people lose money. Even "experts" aren't 100% sure about the returns - nothing is ever guaranteed.

A solution of course would be government regulation but then we get into the whole socialism versus capitalism argument.

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Getting themselves into? That's why independent companies rate the investments, since us mere mortals can't understand the complexities of these new products. S&P and Moodys were complicit in these schemes. When will they be charged?

Anybody who gets involved with credit debt swaps is fully aware that they are gambling. Don't bitch to the Casino when you don't win.

I personally don't feel an ounce of pity that some group of f%$#tards pushing CDOs (the very type of thing that started the whole financial bubble in the first place) got burned.

The administration needs some class war, and fast, because they are sinking in the polls and look set to get torpedoed in november, ergo the SEC goes out and does this.

The banks are NOT stealing money from us! The banks are making money off (a) people who can't live within their means and live off credit and (b) people who want to see their nest egg grow exponentially. If everyone spent only the money they currently have, and kept their money in government backed vehicles, these banks wouldn't be making anywhere near the profits they are currently yielding. The reason income disparity is growing is because people constantly want things they can't afford, and also want easy money. People saw how much money was made in returns during the dot com era and are always looking for the next big thing!

I am in no way defending Goldman's actions, but anyone making an investment has to know what they are getting themselves into and has to know that the banks think of their profit margin first. It just not realistic to expect a bank to put their clients ahead of their profits. Sad, but very true.

Quote: Interesting post but I def don't back the 9/11 theory.

This is the largest transfer of wealth from the poor to the rich in history! Here is what the banksters are doing to us to make major changes in America. In 1960, the ratio between the earnings of the top 20% and the bottom 20% was 30:1. By 1990 this had risen to 61:1, and by 1997 to 74:1. As of 2007, it's now 83:1. The idea is to create a 3rd world type country where there is no middle class. With no middle class, banksters and friends will have all the servants they need so they can live a leisure and morally correct lives, which also makes them very patriotic. The rest of us are a "cancer to society" because we believe that we should be entitled to a decent job, with a decent wage, and even maybe a decent retirement. Who ever said we were entitled to any of that? Now that the banksters are stealing loads of cash from us, it's time for us to shut our mouths, because if we don't, they will strive to make the ratio 95:1, then we can all get on soup lines and they can decide which ones get the soup, without the bread. It's too late folks, we got what we asked for at the voting booth over the last 30 years. Hope you are all having fun watching american idol. There are only a few episodes left.

Hey Healy we need to give more abatements for Goldman Sachs

This should come as no surprise. People have to remember that the bank selling you product is not your friend. End of story.

The problem is that the financial machine has undone so much regulation. This case is going to be tough to prove as GS will just say they were hedging their position, not taking a speculative short position. Nonetheless will be interesting to see how this affects their sterling reputation.

I work at a printer and Goldman Sachs is one of our clients. There is a special "team" of people who work on their material. They all have to pass stringent background checks and have to adhere to very strict rules for the GS work space (no cell phones, you're not allowed to have someone "piggy back" after swiping your security card when entering GS work space, etc.).

I understand the need for security, but I find it hilarious that my friends and co-workers ("the peons") are so scrutinized when the biggest crooks are the investment bankers themselves.

Hopefully, we won't lose the Goldman account they way we lost Bear Sterns and Lehman's accounts.

I bet they shorted GS shares ahead of this story an made a profit off of their own demise. Goldman Suks.