Goldman Sachs Ethical Issues

Improved Essays
Goldman Sachs is one of the most influential investment banks in today’s world. But the question that surrounds is success today is that whether the path chosen to this triumphant position, in line with the legality and ethicality expected to observe in the business world? Does Goldman follow the principles outlined by the company itself? The answers to these questions appear to be blurring when we try to analyse the Goldman Sachs Abacus 2007– ACI Controversy. There are a lot of questions that have been left unanswered. But the lack of proof against Goldman with respect to misrepresenting their long-term clients or ACA about the tenure of the position that Paulson was taking. However, Goldman’s decision to go for an out of court settlement …show more content…
Something that came out of the investigations very clearly was the fact that Goldman never created a clear picture to ICA, IKB or any of their clients regarding Paulson’s role in selection of the abacus portfolio. Goldman constantly maintained a negative outlook on the housing sector but was still more than willing to sell the opposite position on a portfolio which was primarily selected by Paulson who firmly believed that the portfolio would …show more content…
The fact that company allowed and promoted to their clients a portfolio they believed would fail, and did not share this information with their clients pose a question mark on the ethical aspect of its behaviour. The banking sector is considered to play a key role in economic development. It helps to translate someone’s savings into someone’s investment. Thus, the money involved in the Abacus deal, i.e., the money put in by Paulson, IKB and ICA should have been invested further to spread the benefits across all parties that were involved. But the deal only focussed on benefitting Paulson and everyone else was left empty handed. The question about picking the right RMBSs is completely ruled out because of the fact that Goldman allowed some clients to suffer with improper knowledge, knowing the fact that the housing market was set to fail. A bubble burst is not something that can be predicted but Goldman’s analysis showed that they believed that the housing market was very likely to fail. Had IKB and ICA known about Goldman’s stance, their behaviour towards the Abacus portfolio might have been

Related Documents

  • Improved Essays

    Again, there is no way for an average executive to know this. If someone ignores these warnings and attempts to give back to the community to gain some goodwill for their company, they would only be acting short sighted. Friedman says that this kind of behavior only reinforces the idea that the pursuit of profit is wrong and immoral, even when fair pursuit of profit is what a business is meant for (Friedman,…

    • 1021 Words
    • 5 Pages
    Improved Essays
  • Improved Essays

    I believe that the auditors in this case, Ernst & Whinney, should have great blame in not having the sufficient information and knowledge to fall into the pressure of the bribes committed by Minkow and analyze the fraud that was occurring. The upper management in ZZZZ Best made the financial information seem perfectly fine, therefore the auditors were unable to identify any miscalculations that would then lead to fraud. Minkow and his company for years kept on staling the fact that his insurance business had an actual positive cash flows system occurring. This would keep the auditors from seeing the main problem concerning the fraud that was started from the very beginning by Minkow and his carpet/insurance business. As this wasn’t enough fake information conducted by…

    • 1404 Words
    • 6 Pages
    Improved Essays
  • Improved Essays

    6. The film the Inside Job highlights many deficiencies at all levels that contributed to the financial meltdown. Actions could have been taken in order to avert the meltdown. The public ratings agencies such as Standard & Poor’s or Moody’s should have been accurately rating companies and investments rather than being concerned about protecting their business. It’s ridiculous that representatives would claim that their ratings are merely “opinions” and that they had no responsibility.…

    • 771 Words
    • 4 Pages
    Improved Essays
  • Great Essays

    A company’s self interest is always prioritized. CSR is only used as a way to make consumers believe that they are helping society. The final accomplishment businesses wish to complete is a big bottom line. Additionally, companies don’t really help out communities, they only pretend to. By using intelligent marketing strategies and launching very inefficient campaigns, consumers can be easily fooled and fail to analyze a company’s true motives.…

    • 1503 Words
    • 7 Pages
    Great Essays
  • Improved Essays

    Enron Ethical Dilemmas

    • 1030 Words
    • 5 Pages

    Basically they ignore what would bring the pros to their company yet only pay attention to their own benefits. Greedy mind made them lost their interest in working and bring the company to another next top level and also led them to act unethically. Decision made by their leaders did not benefit the company but only themselves is also the factors that led to the failure of Enron. The leaders also loan from their subsidiaries company without thinking to return it and traded in company stock worth millions dollars with the help of insider information. Some of the federal tax payment also been avoided even though some tax payment were collected from their subsidiaries customer.…

    • 1030 Words
    • 5 Pages
    Improved Essays
  • Great Essays

    Barings Bank Case Study

    • 1619 Words
    • 7 Pages

    Barings top management less familiar business proprietary problem (transaction for his own interests). If Barings Auditors and top management understands the business of trading, they would know that it is impossible for Leeson obtained a profit of which he reported, if not taking greater risk anyway. And of course top management and Auditors questioning where the origin of the spider. Lack of knowledge about the trading Barings business is indeed justified in considering the most senior Barings managers have a background of merchant banking. The members of the Assetand Liability Committee (ALCO), which monitors market risk, stated it's a matter of quantity of positions taken Leeson, but later felt comfortable with the thought that eksposure Barings over market risk is relatively small because Leeson over the hedgethe position.…

    • 1619 Words
    • 7 Pages
    Great Essays
  • Superior Essays

    Roma/Mamet is commenting on the indefinites that now plague the world, he talks about how people worry about circumstances that don’t even exist, circumstances such as the ‘bank closing’ and the ‘stock market collapsing’ (Both forms of untouchable money) that simply would not have been worries in the past because they didn’t exist. In the past, Roma seems to be saying, times were much simpler and therefore at least appeared more certain, people didn’t worry about things that hadn’t come to past and therefore were more susceptible to the dreams that engulfed them as they seemed like more attainable situations without the cynicisms of the modern world. However times have morphed due to greater unpredictability and tensions; this is why Roma is unable to say for certain whether the map he shows his client will mean anything to him and why he believes people have become ‘befuddled by a middle class…

    • 1191 Words
    • 5 Pages
    Superior Essays
  • Improved Essays

    Up until the mid to late 20th century, businesses were only recognised for doing one thing which was to increase their profit return to their investors within legal boundaries. However, as a result of an era of social activists, Carroll (1991) acknowledges Corporate Social Responsibility (CSR) as a further extension of a business’s arm to also act within ethical and philanthropic avenues that society would expect of businesses. Like most controversial discussions there is always two opposing views which I will introduce as those like Milton Friedman who opposed CSR as the only obligation a business had was to “make as much money as possible while conforming to the basic rules of society” and to not simply do this would be to disadvantage the…

    • 1433 Words
    • 6 Pages
    Improved Essays
  • Improved Essays

    In this action, Trustworthiness and credibility could not be seen and as accounting officer in charge of collecting money, he overlooked his responsibility and went to the wrong way. Regarding Walt Pavlo’s embezzlement, Walt Pavlo and Harold Mann cheated their client with lying and threatening without honesty. Then Walt wrote off huge amount of account and split the money with losing integrity and responsibility. Restructuring account receivable made the company to lose credibility and integrity and the accounting staff lost honesty. Also if financial reporting manipulated as outstanding accounting balance was disappeared, it is hard to say there are reliability and trustworthiness to the financial report and the company.…

    • 564 Words
    • 3 Pages
    Improved Essays
  • Improved Essays

    First this could have been an indicator of collusion. Although they may have not known each other prior to becoming the auditor Wasendorf could have been giving the accountant a lump sum of cash in order to pass the audit. Secondly, being a one person firm is a indicator of weak control risks. Due it not being able to segregate duties you have no second set of eyes looking at the same paper and not questioning something that the other may not have caught. In addition, being a one person audit firm who continually had got the contract to Peregrine could have not reassessed the audit risk and just taken on the project just based on past experiences, making the audit…

    • 1322 Words
    • 5 Pages
    Improved Essays