Final Score: SEC 3 - Goldman Sachs 0

[Winstonm]

Here are the three most critical elements of the Goldman Sachs settlement and the reasons this is a massive loss for Goldman Sachs and not a moral victory.

 

Recap of analysis from TheBigPicture.com

 

1) GS conceded misleading disclosures, and hence was forced to settle. This will be important in related actions.   This is a painful loss for Goldman Sachs, with expensive repercussions likely to last far into the future.

 

2) Goldman admitted material omissions/misstatements in their marketing materials; They disgorged profits and made up investor losses (IKB and ACA were made whole). When you admit to misleading investors, you open the firm to future liability from all clients who bought money-losing synthetic derivative products. Hence, this is a significant litigation risk for GS — client civil suits are almost certain to follow.

 

3) Bloomberg reports that the settlement changes the vetting and approval process for the marketing of structured securities. “Those changes will probably lead to a new industry standard for disclosures in private sales of securities, even to the most sophisticated investors.”

 

In other words, Wall Street, and not just Goldman Sachs, lost this case

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Appears there is a new sheriff in town, and he works out of the SEC.