Tag Archives: SEC

Goldman Announces Trading Losses After FinReg Passes

Posted on by

I find it awfully convenient that Goldman announces that they did poorly, for them, in their trading over the last quarter. I wonder if there was anything going on in the last quarter?

Losses on Goldman Sachs’s trading desks exceeded $100 million on three days during the period that ended on June 30, according to a filing today by the New York-based company with the U.S. Securities and Exchange Commission. The firm also disclosed that trading losses surpassed its value-at-risk estimate, a measure of potential losses, on two days.

Not only did they start losing money, but they did it while surpassing their VAR. Why, that’s pretty undisciplined for a firm that did not have a losing day the previous quarter. If I was a cynical suspicious type, I’d believe they’ve been rigging their books and now that the tide is going out against them, they want to make themselves look better.

There was that little ugliness that they’ve just finished up.

Goldman Sachs agreed last month to pay $550 million to settle a fraud lawsuit filed by the SEC over Goldman Sachs’s 2007 sale of a mortgage-linked investment.

And of course the Financial Reform bill was passed and signed into law. They were definitely a target in that and have already responded to the bill.

It’s just a funny coincidence that they all of a sudden start losing money and do so in such an undisciplined manner that it looks like they’re reporting to the SEC what they want the SEC to see. Of course this is how all public companies report, which is an issue in its own right, but it certainly does look like Goldman is making a mockery of the reporting rules and the SEC.

And no, I of course do not expect anything to happen as Goldman and the other big boys pony up a lot of cash to their lobbyists.

About Those Vaunted Goldman Traders

Posted on by

While I certainly can understand the talent and dedication and technology that goes in with big banks like Goldman, when I read that there were other banks that had perfect quarters, it really reinforces that this nice run had less to do with talent and more to do with massaging the situation to their advantage.

But Bank of America , Citigroup, Goldman Sachs and JPMorgan Chase & Company produced the equivalent of four perfect games during the first quarter. Each one finished the period without losing money for even one day.

No seriously. I can certainly understand that Goldman and JP Morgan probably have more smarter people in their employ than I will ever even bump into on the T near Harvard. But am I really supposed to believe that both Bank of America and Citigroup also have that many geniuses on their trading desks?

And to find four different banks in the same quarter all made money each and every day and did not have a down say amongst them?

Puhlease, pull the other one, it’s got bells.

“This is not about hitting home runs,” said Jaidev Iyer, who runs his own risk management consulting firm, J-Risk Advisors. “This is just, as we call it, milking the market and your captive client base.”

And that’s about it. They used their own customers orders to make money for themselves at the expense of their customers. It is a zero sum game, after all? So if the big banks came out ahead, someone took the other side of that trade and most likely it was their own clients and customers.

I am so glad the S.E.C. and the Treasury and the Federal Reserve are all watching this and doing nothing. It helps to show that the game is rigged for and by the benefit of the big boys against anyone else, and the government is just along for the ride. Don’t ever forget that yes, they are out to take your money and you should do everything you can to not allow that to happen.

Don’t get me wrong, while I think that any one firm may have the best traders in the world, I find it highly suspicious that four of the largest firms are also the best in the world. To paraphrase, there can be only one, best in the world. Not four.