Legal News

Feeling Drowned in SEC/Goldman News? Click Here

By Ashby Jones

Well, wouldn’tcha know it, honey, there’s an article on the Goldman/SEC case in the morning’s newspaper. Oh, and there’s another. And, wow, look at this different newspaper: there are like three more. Gosh, dear, this is a little overwhelming. We have jobs and kids and, well, we can’t miss Lost tonight. I sure wish there was one place — maybe on the Web? — where I could get up to speed without having to. . . (voice sputters, silence ensues, followed by the sound of light sobbing).

Know anyone who feels like this? Send ‘em our way. Let the LB take them in, give them what they need to know, and send them back out into the world. All in about 3 minutes time.

The Goldman/SEC news on Tuesday:

Goldman isn’t going anywhere. The firm’s back to its money-making ways: Goldman reported on Tuesday that net profit soared 91% to $3.46 billion during the first three months of the year. The results were driven by strong trading and bond underwriting. WSJ; NYT; FT.

Here come the Brits. Britain’s financial regulator, the Financial Services Authority, said Tuesday it was launching a formal probe into the bank’s London operations. Bloomberg; NYT.

Here comes AIG? AIG has been considering potential claims against Goldman and other Wall Street banks over soured mortgage securities that led to heavy losses, according to a person familiar with the matter. WSJ; FT.

Here comes Greg Craig. The former White House counsel and current Skadden partner has been retained by Goldman for, as ABC news puts it, “some political protection.” Federal ethics laws prohibit Craig from lobbying the White House, but say nothing about his lobbying the SEC, it seems.

The SEC’s 3-2 vote to push forward with the suit was highly unusual. Typically, reports the WSJ’s Kara Scannell, the SEC moves forward only after a unanimous vote. “It’s really important on enforcement matters to try to get the agency all reading from the same page,” said Harvey Pitt, a former Republican SEC chairman. As a technical matter, Pitt said, it won’t affect the court case, but he noted that judges aren’t immune from what’s happening elsewhere. “Nobody ever wants to be pursuing an enforcement case that can be attacked on anything but the merits.”

Who at Goldman approved the Abacus deal? The deal, reports the WSJ’s Kate Kelly, was quickly approved by a group of roughly a dozen senior executives in a routine meeting in a drab conference room. The Goldman group that approved the deal was led by Daniel Sparks, Goldman’s mortgage chief, who has since left the firm.

How did the ratings agencies treat the Abacus deal? S&P and Moody’s blessed it, giving it their highest rating. Thing is, the deal was one of the worst-performing mortgage deals of the housing crisis, based on one measure of rating-firm downgrades. The Abacus deal could serve as Exhibit A for what went wrong with ratings, industry experts told the WSJ’s Aaron Lucchetti and Serena Ng.

The timing of the SEC’s suit was more than a coincidence, opine the opiners at the WSJ.

Full post as published by Law Blog - WSJ.com on April 20, 2010 (boomark / email).