Friday, December 31, 2010
Goldman Sachs Shock
On 19 April 2010, The Wall Street Journal published a long article on a SEC (Security and Exchange Commission) investigation. The case involves the hedge fund, Pualson & Co., which allegedly sold CDO (collateralized debt obligation), ABACUS 2007-AC1, in violation of U.S.law. CDOs are derived from mortgage bonds, but they do not actually hold assets even though one can invest in them. The key figure is Paolo Pellegrin, the head of the hedge fund. The British government stated that the U.K. would also investigate Goldman Sacks transaction in 2008. As Robert Samuelson states in the Japan Times, today’s the main business on Wall Street is trading for their own accounts and creating trading opportunities for clients (Japan Times). Goldman Sacks might just do their business between the “black” and “white” parts, which ultimately created world financial system tsunami. By 15 May 2010, besides Goldman Sacks, JP Morgan, Citi-group. Deutsche Bank and UBS, are all the subject of criminal investigation for selling mortgage-related deals.