Sums up my thoughts on this.
The law does not matter but the intentions were so wrong.
GS lied.
On the surface, these deals look complicated. They are. But the alleged fraud at the heart of the case against Goldman and its CDO dealings is one of the simplest and oldest forms of deception: lying. According to the SEC, Goldman told one group of investors they were buying a AAA-rated (by lapdog ratings agencies, but that's another story) high-yield investment put together by an independent firm called ACA Management. But the SEC says the person really picking the collateral was Paulson, an investor whose only interest was: Paulson. What Goldman allegedly sold, like any good snake-oil salesman, was a worthless, well-packaged fake.
Read more: http://www.time.com/time/business/article/0,8599,1983747,00.html#ixzz0lqmgsrOD
On the surface, these deals look complicated. They are. But the alleged fraud at the heart of the case against Goldman and its CDO dealings is one of the simplest and oldest forms of deception: lying. According to the SEC, Goldman told one group of investors they were buying a AAA-rated (by lapdog ratings agencies, but that's another story) high-yield investment put together by an independent firm called ACA Management. But the SEC says the person really picking the collateral was Paulson, an investor whose only interest was: Paulson. What Goldman allegedly sold, like any good snake-oil salesman, was a worthless, well-packaged fake.
Read more: http://www.time.com/time/business/article/0,8599,1983747,00.html#ixzz0lqmgsrOD
Paulson and Magnetar are a bit more complex. Agreed that he was a smart guy and did his homework.
But he too could have found other ways to short the market rather than dress up a portfolio of bonds as AAA. He was just greedy and wanted to maximize his profit.
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