Posted: July 16, 2010

 

"STARK LESSON" FOR GOLDMAN SACHS?

 

Let's talk about breaking the law for just a minute.

Goldman Sachs will pay $550 million to the Securities and Exchange Commission to settle charges of securities fraud stemming from mortgage investments. Remember, these investments were a major component in the economic meltdown of 2008-2009.

“Half a billion dollars is the largest penalty ever assessed against a financial services firm in the history of the S.E.C.,” said Robert Khuzami, the SEC's director of enforcement. “This settlement is a stark lesson to Wall Street firms that no product is too complex, and no investor too sophisticated, to avoid a heavy price if a firm violates the fundamental principles of honest treatment and fair dealing.”

Heavy price? Khuzami doesn't mention that Goldman made $13.39 billion in profit in 2009 while the rest of the economy was in free-fall, thanks in part to Goldman's reckless behavior.

Let's talk a poll: If you broke a few laws playing with other people's money and raked in $13.39 billion, then had to pay 4% of it in fines to keep the cops off your back, would you be willing to do it again?