Jamesb101.com

commentary on Politics and a little bit of everything else

Morgan Stanley gets a criminal look over on some of its CDO business…….

This story is  a light shown on something that been going on since 2009, when the SEC asked the US Attorney’s office to sit in on its investigation into Morgan Stanley’s betting against clients  CDO’s*……It is alleged that Morgan Stanley took better performing CDO’s for themselves and only offered investor’s ones with more risk…..

Morgan Stanley is saying they have not be formerly notified by the US Attorney’s Office that they are the target of a specific investigation…..

One should remember that a Justice investigation does not mean a criminal complaint will be filed…..

In other news……

It has been reported that Goldman-Sachs has entered into settlement talks with the SEC in its civil case……

One feature of the Morgan Stanley deals was a structure that could increase the magnitude of the bullish investors’ exposures to the underlying mortgage bonds. This feature, which was disclosed in some offering documents, made it more likely that such investors could lose money if the underlying bonds performed poorly.

Morgan Stanley traders took the more profitable, bearish side of these transactions, according to traders. These positions weren’t disclosed in some deals. It couldn’t be determined how much money Morgan Stanley made with these wagers.

The SEC’s industry-wide civil investigation into Wall Street activities in selling CDOs began in 2009. Beginning earlier this year, prosecutors from the Manhattan U.S. attorney’s office began showing up to meetings arranged by SEC investigators who were questioning individuals about their firms’ practices, people familiar with the matter said.

There have been several rounds of SEC subpoenas issued in the probe, a person familiar with the matter said.

Last summer, the SEC asked Wall Street firms about any of their clients that were betting against CDOs, the person says. In the fall, Morgan Stanley provided offering documents to the SEC about CDOs, including its Dead Presidents deals. Morgan Stanley and other firms received a subpoena in December 2009 asking about its sale and marketing of CDOs, people familiar with the matter said.

In the past six weeks, a fresh round of SEC subpoenas have asked a smaller number of Wall Street firms for a broad range of information on CDO deals, including prospectuses, offering documents and other data that would include disclosure statements.

More……..

*Note…..CDO’s…

Pools of bond-related investments called collateralized-debt obligations…….

May 12, 2010 Posted by | Blogs, Breaking News, Crime, Government, Law, Media, Men, PoliticalDog Calls, Politics, The Economy, Updates | , , , , , | 1 Comment

Goldman-Sach’s stock takes a beating…….

While the Dog thinks the guys at Goldman-Sachs dodged the Congressional bullet……

The world of perception is riding them hard…

The leak of the Criminal Investigation has sent the company’s stock steeply down costing holders of that stock a whole lot of value..

Shares of Goldman Sachs Group Inc (GS.N) fell as much as 9.9 percent on Friday to a more than nine-month low, a day after news that U.S. federal prosecutors in New York have begun investigating the company.

HOT STOCKS

The reported criminal investigation also prompted at least two analysts to downgrade their ratings for Goldman. Bank of America Merrill Lynch analyst Guy Moszkowski called the reports “a concern even if no charges ultimately result.”

In addition, the yield spread over Treasuries of Goldman Sachs’ 5.375 percent notes due in 2020 widened to about 201 basis points in heavy volume, from 184 basis points late on Thursday, according to MarketAxess.

The criminal investigation came less than two weeks after Goldman was charged with civil fraud by the U.S. Securities and Exchange Commission. Earlier this week, Goldman Chief Executive Officer Lloyd Blankfein and other executives underwent cross-examination by lawmakers at a U.S. Senate hearing on their role in trading mortgage-related products in 2007.

Goldman, which is now facing one of the biggest crises in its 140-year history, is seeing its shares bear the brunt of the past two weeks’ developments.

Goldman shares were down 9.6 percent at $144.88 in midday trading on the New York Stock Exchange. The shares are now down more than 21 percent since the SEC probe was announced, compared with a 2.8 percent decline in the Amex Securities Broker dealer index .XBD.

“It’s going to keep (Goldman stock) capped in terms of potential upside,” said Walter Todd, a portfolio manager at Greenwood Capital. “You started to see it recover and then something else comes out.

“The door was opened when the SEC announced their fraud charges,” Todd said. “I think you’re going to have things of this nature popping up for the foreseeable future for Goldman, but the criminal investigation obviously escalates it to the next level. … It’s going to be an ongoing overhang for these guys.”

More……..

April 30, 2010 Posted by | Blogs, Breaking News, Crime, Government, Law, Media, Men, Other Things, PoliticalDog Calls, Politics, The Economy, Updates | , , | 5 Comments

Goldman-Sach's stock takes a beating…….

While the Dog thinks the guys at Goldman-Sachs dodged the Congressional bullet……

The world of perception is riding them hard…

The leak of the Criminal Investigation has sent the company’s stock steeply down costing holders of that stock a whole lot of value..

Shares of Goldman Sachs Group Inc (GS.N) fell as much as 9.9 percent on Friday to a more than nine-month low, a day after news that U.S. federal prosecutors in New York have begun investigating the company.

HOT STOCKS

The reported criminal investigation also prompted at least two analysts to downgrade their ratings for Goldman. Bank of America Merrill Lynch analyst Guy Moszkowski called the reports “a concern even if no charges ultimately result.”

In addition, the yield spread over Treasuries of Goldman Sachs’ 5.375 percent notes due in 2020 widened to about 201 basis points in heavy volume, from 184 basis points late on Thursday, according to MarketAxess.

The criminal investigation came less than two weeks after Goldman was charged with civil fraud by the U.S. Securities and Exchange Commission. Earlier this week, Goldman Chief Executive Officer Lloyd Blankfein and other executives underwent cross-examination by lawmakers at a U.S. Senate hearing on their role in trading mortgage-related products in 2007.

Goldman, which is now facing one of the biggest crises in its 140-year history, is seeing its shares bear the brunt of the past two weeks’ developments.

Goldman shares were down 9.6 percent at $144.88 in midday trading on the New York Stock Exchange. The shares are now down more than 21 percent since the SEC probe was announced, compared with a 2.8 percent decline in the Amex Securities Broker dealer index .XBD.

“It’s going to keep (Goldman stock) capped in terms of potential upside,” said Walter Todd, a portfolio manager at Greenwood Capital. “You started to see it recover and then something else comes out.

“The door was opened when the SEC announced their fraud charges,” Todd said. “I think you’re going to have things of this nature popping up for the foreseeable future for Goldman, but the criminal investigation obviously escalates it to the next level. … It’s going to be an ongoing overhang for these guys.”

More……..

April 30, 2010 Posted by | Blogs, Breaking News, Crime, Government, Law, Media, Men, Other Things, PoliticalDog Calls, Politics, The Economy, Updates | , , | 5 Comments

SEC asks Justice to probe for criminality in Goldman-Sachs……

I said a few days ago to not expect a criminal case against Goldman-Sachs……

And I still believe it….

While the Dog could certainly be wrong….

Criminal Cases against these Mega companies very seldom yield big results….

And with an election coming in November and two years from now…..

You don’t want to bite the hand that feeds you…..

Stay tuned…….

Prosecutors haven’t determined whether they will bring charges in the case, say the people familiar with the matter. Many criminal investigations are launched that never result in any charges.

The criminal probe raises the stakes for Goldman, Wall Street’s most powerful firm. The investigation is centered on different evidence than the SEC’s civil case, the people say. It couldn’t be determined which Goldman deals are being scrutinized in the criminal investigation.

A spokesperson for the Manhattan U.S. Attorney’s office declined to comment. Goldman declined to comment.

Goldman shares fell 2.6% in after-hours trading to $156.08 after The Wall Street Journal reported the news of the investigation. At the 4 p.m. market closing, Goldman shares were up 2.1%.

Some background……

The SEC and Justice Department often coordinate their actions on investigations. The probe underscores heightened efforts by the Manhattan U.S. Attorney’s office in prosecuting white-collar and Wall Street crime. It is in the midst of pursuing the largest insider-trading case in a generation, charging 21 individuals and negotiating 11 guilty pleas in that matter.

But the Goldman probe presents a significant challenge for the government. Prosecutors in the Brooklyn office of the U.S. Attorney last year lost a high-profile fraud case against two former Bear Stearns Cos. executives, in the first major criminal case linked to the financial meltdown.

Prosecutors had accused the Bear Stearns employees of lying to investors in 2007 about the health of two funds that eventually collapsed. The case centered on what the government viewed as incriminating emails indicating the traders knew the mortgage market would fall but didn’t disclose that view to investors.

To bring any criminal charges in the Goldman matter, prosecutors would need to believe they had gathered evidence that showed that the firm or its employees knowingly committed fraud in their mortgage business. Proving such intent to break the law typically is the toughest hurdle for prosecutors to clear.

Another stumbling block: Such financial cases can be highly complex.

More……..

April 29, 2010 Posted by | Blogs, Breaking News, Counterpoints, Government, Law, Media, Men, Other Things, PoliticalDog Calls, Politics, The Economy, Updates | , , | Leave a comment