Sunday, July 18, 2010

Fair Analysis Of SEC Goldman Settlement: Will The Court Accept It?

From "The SEC’s strike suit" by Larry Ribstein on July 18, 2010, on Truth on the Market blog:
The bottom line is that this suit [SEC vs Goldman Sachs] has proved to be no more than a common "strike" suit, no better than the sort of private securities class actions that triggered Congressional reform 15 years ago. Instead of attorneys’ fees, the SEC’s objective appears to have been purely political. In the end it extracted a ransom payment from Goldman so the firm could reclaim its reputation and get back to business.

The court must now review the settlement. It should take a cue from the dissenting Commissioners and reject it because of the puzzling and troubling inconsistency between the amount of the settlement and Goldman’s meaningless admissions. The SEC should have to prove exactly what Goldman did wrong. This will force Goldman to either litigate or make a meaningful settlement. Goldman is hardly an object of pity at this point. In any event, the issues here go far beyond Goldman to, among other things, the proper role and function of the SEC.

It is sad that the SEC not only cannot be trusted to find fraud, but that it can no longer be trusted to litigate and settle cases involving the supposed frauds that it finds. But this is where we find ourselves in the days following 'financial reform."
[Definitional link for strike suit added].

Read much more about the Goldman case and settlement from Larry Ribstein here.

1 comment :

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