» Raj and Rajat: Back in 2011 Raj Rajaratnam, the founder of the once-colossal Galleon Group hedge fund management firm, was sentenced to 11 years in prison for insider trading. Rajaratnam had gained choice information unavailable to the public at large by using a series of secret contacts – one of whom, Rajat Gupta, has now faced the music himself. Prosecutors successfully argued that Gupta, a former board member of both Goldman Sachs and Procter & Gamble, was one of Rajaratnam’s sources, leaking him the details of Goldman’s first-ever quarterly loss in late 2008. Convicted on four out of six counts of insider trading, Gupta will likely face prison time when sentenced later in the year.
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» Remember former Goldman Sachs VP Greg Smith? You know, the one who published his resignation letter in the New York Times? Well now he’s writing a book that will cover his 12 years with the company, and at least one expert on the bank expects serious blowback. William Cohan, author of Money & Power: How Goldman Sachs Came to Rule the World, explained that while the idea of the bank putting its own interests before its customers was not a new one, “what is new is that it’s an employee saying it.”
We disagree with the views expressed, which we don’t think reflect the way we run our business. In our view, we will only be successful if our clients are successful. This fundamental truth lies at the heart of how we conduct ourselves.A spokeswoman for Goldman Sachs • Discussing the claims made in a New York Times op-ed by now-departing exec Greg Smith. An exec speaking off the record in the response story says that Smith’s job was a “relatively junior position held by thousands of Goldman employees around the world,” despite the fact that he’s listed as a vice president. I’m sorry, what sort of effed-up corporate culture must you have to have thousands of vice presidents? On a side note, Smith’s letter is already a meme. Check out these quips, thought up by HyperVocal.
It should be noted that the Times decided to illustrate Greg Smith’s Goldman Sachs resignation op-ed with this, reminding us all that he’s still a buzzard, feeding on carcasses — and now he’s just going to go feed off another.
(Illustration: Victor Kerlow / NY Times)
Story of the morning. Perhaps the most iconic open letter since Steve Jobs’ “Thoughts on Flash” from two years ago. Also worth a read when you’re done. (ht @AntDeRosa on that front)
He will pass on a $12 million severance package, AP reports. The former New Jersey governor, who has been the target of much scrutiny as a result of shady business practices (it appears he bet the business on the Euro debt crisis using investor money, and lost, meaning that the investor money is gone), quit his job early Friday. “I feel great sadness for what has transpired at MF Global and the impact it has had on the firm’s clients, employees and many others,” he said in a statement. “I intend to continue to assist the company and its board in their efforts to respond to regulatory inquiries and issues related to the disposition of the firm’s assets.” source
MF Global CEO Jon Corzine: Surprisingly calm dinner host. On October 24, the former Goldman Sachs head and ex-New Jersey governor spoke to a bunch of traders during a steak dinner at the Helmsley Park Lane Hotel in NYC. Some guests called him “delightful.” But he had to leave early because he had an earnings call the next day. The next day, MF Global announced the bottom fell out. Less than a week later, they filed for bankruptcy. Talk about holding it together. (Above: Jon Corzine playing affable dinner host at another party. Amanda Gordon/ Bloomberg)
Reports of short falls of client money … if true would be a disaster for all the smaller brokers and banks as nobody will trust them anymore.A trader based out of London • Discussing the situation with MF Global, a financial firm hard hit by the Euro debt crisis, which apparently failed to keep customer money separate from the firm’s own accounts. The company, led by former Goldman Sachs leader and ex-New Jersey Gov. Jon Corzine (great combination), is raising the spectre of some if the 2008 financial crisis gunk — remember Lehmann Bros.? Let’s hope they can get this settled and — most importantly — customers can get their money out. source (via • follow)
» A tidy little sum: It’s being reported that Citigroup has agreed to the above settlement, which would bring to an end a civil fraud complaint filed by some of their investors. The story is, as it happens, quite similar to what Goldman Sachs was found to have done (Goldman shelled out $550 million in that case). Citigroup helped structure investment portfolios for their clients without telling them that the bank itself was selecting the assets while betting against their success. In simple terms, a conflict of interest, and one that netted the company nearly $1 billion dollars. That figure, also, says something about the problem of mega-corporations buying out of legal trouble; namely, the amount it costs to satisfy a plaintiff is nearly never enough to such a company to truly dissuade the behavior.
Wrote a thing.
Hat tip to this headline writer.
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U.S. to sue banks over mortgages: This oughta be fun. The list includes a over a dozen names, such as Bank of America, Goldman Sachs and JPMorgan Chase. “The suits will argue the banks, which assembled the mortgages and marketed them as securities to investors,” the article says, “failed to perform the due diligence required under securities law and missed evidence that borrowers’ incomes were inflated or falsified. When many borrowers were unable to pay their mortgages, the securities backed by the mortgages quickly lost value.”
» The American companies include: Bank of America, JPMorgan Chase, Morgan Stanley, Goldman Sachs, and Freddie Mac. Two of the top three companies on the list are Chinese. On the upside, the Treasury has as much money as Google, so that’s kind of a nice consolation prize.
» A pretty hefty one-time charge: While Goldman Sachs’ profits for the current quarter, $2.74 billion, were down 21 percent from a year earlier because of the payday to their sugar daddy, if you don’t count the payment to Warren, their profits — $8.38 billion — would have been up by 49 percent from a year earlier. In other words, they’re richer than we are and Wall Street is celebrating.
Our investigation found a financial snake pit rife with greed, conflicts of interest, and wrongdoing.Sen. Carl Levin • Offering an assessment of a report that his subcommittee, which is searching for the causes of the financial crisis, released about the crisis. The report singles out Goldman Sachs, calling it a “case study” for the conflicts of interest that abound around Wall Street — specifically for betting against the very subprime mortgage packages it was selling. Levin also wants to bring perjury charges against Goldman’s CEO, Lloyd Blankfein, for his testimony in Congress last year. In other words, someone has watched “Inside Job.” The stock market is down on the news of the 600-page report. source (via • follow)
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