Goldman And Tourre Case Analysis
The SEC filed a civil action suit against Goldman and Tourre for their conduct under the ABACUS deal. The SEC’s complaint charged Goldman and Tourre with violations against Section 17(a) of the Securities Act of 1933, Section 10(b) of the Securities Exchange Act of 1934, and Exchange Act Rule 10b-5 (SEC). Each of the following rule of law states, among other things:
“It shall be unlawful for any person in the offer or sale of any securities … (2) to obtain money or property by means of any untrue statement of a material fact or any omission to state a material fact necessary in order to make the statements made, in light of the circumstances under which they were made… “
“ POSITION LIMITS —As a means reasonably designed to prevent fraud and manipulation, the Commission shall, by rule or regulation, as necessary or appropriate in the public interest or for the protection of investors, establish limits (including related hedge ex emption provisions) on the size of positions in any security-based swap that may be held by any person.” …show more content…
The email was meant to elucidate the firm and public’s “conflict of interest” policy. In the message, Goldman stated, “You should not consider Trading Ideas as objective or independent research or as investment advice. When we discuss Trading Ideas with you, we will not be acting as your advisor (including, without limitation, in relation to investment, accounting, tax or legal matters) and the provision of Trading Ideas to you will not give rise to any fiduciary or equitable duties on our part” (Sorkin 1).
In the case of Goldman vs. Common Wealth of Massachusetts, the court ruled, “Goldman failed to reasonably supervise GIR equity analysts’ communications to prevent and detect dissemination by GIR equity analysts of certain unpublished short term trading ideas” (SEC) and were held accountable to Section 204 (a)(2)(J) of the Act, which in part states that:
“The secretary may by order…. deny, suspend, or revoke, any registration … if he finds (1) that the order is the public interest and (2) that the applicant or registrant (J) has failed reasonably to supervise agents, investment adviser representatives or other employees to assure compliance with this chapter”