Goldman To Pay SEC $550 Million: Chump Change
The SEC announced the Goldman fine with fanfare. But the amount Goldman Sachs will ante up for its role in the Abacus mortgage fund was small potatoes. Howard Chen, a banking analyst, had the best take on Goldman’s lack of remorse and unlikely damage: (1) He observed that there would be no management changes at Goldman; and, (2) ”We do not anticipate any material long-term impact to the firm’s client franchise.” Mr. Chen is right, of course, but those who step in line with his conclusions are the chumps. The tale of Abacus should make any client of Goldman’s query very pointedly the meaning of the terms “fiduciary” and “duty” in Goldman’s training materials. Goldman was fooling around with trust when it did the Abacus deal. Legalisms cannot change perception. Fool around with trust under the comfortable laxity of compliance and you fool around with markets and capitalism. Folks do not invest when they cannot trust. And all the toes-to-the-line definitions of “fiduciary” and “duty” cannot change the perception that folks got duped.
