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Goldman Sachs Charged With Fraud
The Goldman Sachs Inc is a Wall Street’s titan that was able to survive during a financial crisis as a result of deceiving its clients. During the financial crisis it was charged for deceiving its clients for having sold to them mortgage securities that had been designed secretly by John Paulson’s hedge-fund firm. After designing the securities John made a killing betting for the collapse of the housing market. But Goldman denied the securities and Drexel Burnham who was carrying out investigations succumbed as a result of criminal insider trading. Due to that the charges the firm was to undergo were unfounded and Goldman fought to defend its reputation. Civil charges against Goldman and Fabrice Tourre which was one of Goldman’s star traders marked one of the major attacks that the government made on Wall Street. According to Roben & Paula (2010) the deals that the company had made are believed to have caused the financial crisis that was experienced by the nation as well as the whole world.
Regulators claim that Paulson’s firm was allowed by Goldman to assist in designing a Collateral Debt Obligation (CDO) financial investment which was built from specific sets of mortgage assets that were risky hence essentially set CDO to failure. While all that was happening CDO investors were not told anything about the role of Paulson nor were they told about his intentions. In the year 2007 Mr. Paulson walked home with $4 billion for having bet correctly on the collapse of housing.
According to Securities and Exchange Commission SEC, Mr. Tourre played a role of piercing the bonds together and then touted them to the investors. And before the housing market had collapsed Mr. Tourre wrote a message via his email claiming that the building was to collapse anytime.Tourre wasn’t alone since senior Goldman executives had signed the deal. Goldman was Wall Street’s most profitable firm. After the financial crisis the tax payers rescued the firm by contributing funds that helped the firm rebound and to resettle its bonuses. It paid its employees a total of $16 billion as compensation. This clearly reveals that the final load was on the people who had to suffer the consequences of the management’s mistakes. For example the industrial average of Dow Jones fell by 1.04% to 11028.19 and this sparked fears among investors that other firms are likely to be affected as a result of Wall Streets behavior during the crisis.
Other firms and Goldman are criticized for being involved in building buying and making of complex...