NYSE Regulation, part of NYSE Euronext, imposed the fine. Half the penalty is to be paid to the US Treasury, whose Secretary is a an income tax evader.
According to NYSE Regulation, between Dec 2008 and January 2009 GS accepted roughly 385 orders to short equity securities in which it had open 'fail to deliver" positions, without first borrowing or arranging to borrow the securities as collateral. Charges are the GS failed about 68 times in the same time period to notify customers about these lapses.
A short sale occurs when a customer borrows a security, sells it in a bet that the price will go down, then buys it back later at the lower price to reimburse the security's lender. A "fail to deliver" occurs when a clearing intermediary firm fails to satisfy its obligation to deliver a particular security on a particular date.
Goldman consented to the hand-slap and the $450k fine without admitting wrongdoing.
Some investors have the means and connections to arrange shorts, some do not. And become the victims of shorters, if they choose to sell at the bottom out of fear, which is what shorters hope for and try to instill in small investors. All profit, in a very real sense, comes from commerce, and is based on faith in the validity of a promise. Is knowingly failing to honor that promise a criminal act? Is it treason, as well? You be the judge.
Well, I’m in a hard place here...
Hitler had the Jews
Obama has Goldman Sachs.
As I have yet to believe Anything coming out of Obama’s trap, I don’t know what to believe about Goldman.. and I’ll wait to see..
this was a speeding ticket for a world wide crime.
So when the contract is agreed, no one has bought or sold anything.
Since no one in his right mind would agree to a forward contract selling a stock he owns at below the current market price, a short contract makes no sense unless you plan to acquire the stock at a lower price at a date at or near the contract delivery date.
The securities rules require you to borrow the stock at the current price (really, you get a loan on the margin & pay interest to the stock holder for the loan). Your profit is the expected difference between your negotiated sale price and the (lower) actual price at the contract expiration, minus any interest and other transaction costs.
a) In some ways it's not much different than buying an out-of-the money put option.
b) if these were OTC short contracts negotiated with Goldman, I assume the counterparties were not ordinary investors but other big fish;
The real issue is whether Goldman was making use of insider knowledge of other financial institution's bad positions to make the short contracts, e.g. knowing Citi's mortgage backed securities were junk before anyone else did.
I want to short sale and make some easy money. Why isn't everyone doing it?
Arlene?
I thought something was funny about that guy.
Virtually legal counterfeiting......sure they got a small civil fine, but the one who really got slapped, is the small investors whose share values were diminished a result of these blood suckers.
Traditionally a Democratic booster, and one of Barack Obama’s top sources of funds in this past election, Goldman has always had some particularly strong allies within government.
Emanuel is one such ally. An interesting early chapter in the Goldman-Emanuel relationship took place in the setting of Bill Clinton’s campaign for the White House in 1992. Clinton hired Emanuel as his chief fundraiser. At the same time, however, Emanuel was on the payroll of Goldman Sachs, receiving $3,000 per month from the firm to “introduce us to people,” in the words of one Goldman partner at the time. This is certainly a noteworthy relationship, but it’s one that has almost entirely escaped scrutiny. (snip)
In his four terms in Congress, Emanuel has raised $74,750 from Goldman, making the firm his number four source of funds.
Goldman has helped Emanuel. How has Emanuel helped Goldman? The most obvious answer, as mentioned in this column two weeks ago, is in Emanuel’s lead role in shepherding the “$700 billion” bailout—first proposed by former a Goldman CEO, Bush Treasury Secretary Henry Paulson—through the skeptical House.
Of course, back in the Clinton days, Goldman benefited from NAFTA and the bailout of the Mexican currency, with Emanuel pushing NAFTA through Congress, and Rubin hammering out the peso bailout.
Did Goldman improperly funnel money to the Clinton campaign by subsidizing Emanuel’s salary in 1992? Did Goldman’s help to Clinton spur the Democratic president to push NAFTA and the Mexican bailout?
The answers to these questions are opaque, and with Emanuel burrowed deep within the Obama White House, the continued relationship between Goldman Sachs and Obama’s right hand man won’t be easy to follow.
Watch which regulations of Wall Street Obama fights for. Watch where the bailout money goes. And don’t be surprised to see Goldman soon sitting pretty once again.
SOURCE http://www.washingtonexaminer.com/opinion/columns/TimothyCarney/
Maybe someone pushed the wrong button when it was suppose to be a $4,500,00 fine.
Naked short selling ought to be illegal. Naked short selling has been used to destroy companies when traders borrow, buy, and sell stocks that they don’t own and may not even exist.
The list, ping
This was just a big show from the start, to keep those donations pouring into the MaObama team! Now, they will use this to make their takeover of the financial sector complete and pass another “reform” bill.
Any “Reform” legislation they sell is code for Socialist totalitarian rule.
not millions?
A simple reform is to require that short selling be done with borrowed shares, plus enforcing the uptick rule.