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March 14, 2013

Goldman Sachs: Calling clients “Muppets” and worse, Greg Smith


As noted in the Roundup, Goldman Sachs is once again being cited for ripping off its clients, this time in the IPO space. Goldman had already paid massive fines for causing the mortgage crisis by selling its own clients toxic assets. Later the firm would take considerable reputational damage when a former Goldman Sachs executive, Greg Smith, wrote an Op-Ed for the New York Times where he claimed Goldman employees routinely took advantage of the firm’s clients and enjoyed mocking them afterwards – the birth of the “Muppet” meme.

Now Joe Nocera has obtained, due to a clerical error, documents detailing Goldman Sachs screwing its IPO clients. Goldman’s clients, eToys, are in the midst of a lawsuit against Goldman. eToys is claiming Goldman conspired to keep the price of the IPO low to benefit their investment bank clients who gave Goldman a kickback in return. eToys later went out of business partly due to lacking capital that it could have raised in a more honest IPO.

Recently, however, I came across a cache of documents related to the eToys litigation that seem to tilt the argument in favor of the skeptics. Although the documents were supposed to be under seal, they were sitting in a file at the New York County Clerk’s Office, available to anyone who asked for them. I asked.

What they clearly show is that Goldman knew exactly what it was doing when it underpriced the eToys I.P.O. — and many others as well. (According to the lawsuit, Fitt led around a dozen underwritings in 1999, several of which were also woefully underpriced.) Taken in their entirety, the e-mails and internal reports show Goldman took advantage of naïve Internet start-ups to fatten its own bottom line.

The documents detail that Goldman’s focus was on using the eToys IPO to generate more business with its investment clients. After the investment clients profited the Goldman Sales force sprung into action calling the clients to secure more business gaining large commissions. A quid pro quo with eToys and other IPO clients losing out.

Goldman carefully calculated the first-day gains reaped by its investment clients. After compiling the numbers in something it called a trade-up report, the Goldman sales force would call on clients, show them how much they had made from Goldman’s I.P.O.’s and demand that they reward Goldman with increased business.It was not unusual for Goldman sales representatives to ask that 30 to 50 percent of the first-day profits be returned to Goldman via commissions, according to depositions given in the case.

“What specifically do you recall” your Goldman broker wanting, asked one of the plaintiffs’ lawyers in a deposition with an investor named Andrew Hale Siegal.

“You made $50,000, how about $25,000 back?” came the answer. “You know, you made a killing.”

“Did he ever explain to you how to pay it back?” asked the lawyer.

“No. But we both knew that I knew how,” Siegal replied. “I mean, commissions, however I could generate.”

30-50%! Now that’s an incentive structure.

Luckily for Goldman Sachs they were not so greedy they forgot to do another kickback, this one in the form of bribes to Congress and the President. Otherwise they might have to actually suffer for their misbehavior. But having bought protection from the Justice Department while getting massive subsidies and bailout guarantees from the Federal Reserve ensures Goldman’s continued survival and dominance. And as long as Goldman has the government behind them they will have clients no matter how likely they are to treat them like Muppets.


LeakSource | mars 13, 2013 à 9:45 | Catégories: News | URL:

Prince Charles describes ‘horror’ of Syria’s refugee crisis

The Prince of Wales described the “horror” of Syria’s refugee crisis today as he visited a camp in Jordan for those who have fled the bloody civil war.

10:35AM GMT 13 Mar 2013

The Prince and the Duchess of Cornwall met victims of torture and families torn apart by the conflict who begged them to “Help us.”

The Duchess described the refugees’ plight as “harrowing” after hearing their stories during the visit to the King Abdullah Park refugee camp seven miles from the Syrian border.

It is home to 1,200 of the 440,000 Syrian refugees who have poured into Jordan over the past two years, and houses less than 24 hours’ worth of new arrivals in the country.

The Royal couple dropped in on one of the families living in prefabricated huts in the camp, where Naim, 55 (who did not want to give his surname for fear of reprisals) told the Prince he had been tortured.

“I was arrested twice in 2011 because I write poetry against the [Assad] regime,” he said. “They put out cigars and cigarettes on my body and arms.

“They would tie me up and blindfold me and started doing things to my body.”

He fled his village near the southern Syrian border with his wife and five children in July.

The Prince asked him: “Do you see any end to this horror?”

He replied: “It is with you. You have the solution. The Syrian people are everybody’s problem.” He added: “Help us.”

The Prince said: “Many of these children have been traumatised by the horrors of what they’ve witnessed before they got here.

“Some of them have lost their parents and had horrendous experiences and it is remarkable what all these wonderful [aid agencies] are doing to deal with this unbelievable and heartbreaking situation.”

He praised the “truly remarkable” generosity of the Jordanians, but said: “It’s putting more and more strain on food and hospitals, so clearly the Jordanians need more assistance and help to be able to cope with this immense challenge. It’s a desperate situation.”

The couple also visited a therapy session where children aged six to 14 are given help to overcome the trauma they have lived through by drawing happy memories of home to give them hope for the future.

Noraman, 13, who lost her father and two brothers when her village of Mahaja was attacked, drew apple and orange trees and told the Duchess: “This is the garden I remember in my house but I’m not sure it will be there when I get back.”

In the garden she drew were a flag of Syria and a flag of Jordan, reflecting her uncertain future.

Emira, 12, does not know if her father is alive or dead and said: “I’m not sure if I will see him again. My mother sometimes says he is dead and sometimes says he is in prison.”

Sava Mobaslat, 41, the programme director for Save the Children in Jordan, said the 600 children at the camp are bussed to local schools to continue their education but go to the children’s centre every day for therapy sessions.

“It is aimed at building coping mechanisms and providing resilience,” she said. “We use drawing, drama, music and arts as an alternative form of expression through which they can express their anxiety and frustration to help them get over it.

“They draw guns, bodies, a lot of red to begin with and gradually they go back to drawing the garden in their back yard.

“The time frame for their recovery varies from child to child, it takes longer for someone who has witnessed the death of a parent or sibling. We have one girl who was walking to school and saw it bombed with her siblings inside and it took her a long time to get over that image.”

After meeting women making knitted goods to raise money for the camp, the Duchess said: “Seeing all these children, some of whom have lost their parents and been adopted by others, I feel it’s quite heartbreaking.

“Some of their stories are so harrowing, but what I find so remarkable is their strength of spirit and the way they are so cheerful despite their circumstances.

“I think that is women for you. They have got their children to look after, they have to survive.

“But to think that many of them don’t even know whether their husbands are alive or dead…it is just awful.”

King Abdullah Park does not compare in scale to the Zaatari camp nearby which has 146,000 people in it, but security concerns meant the Royal couple could not go to the larger camp.

Andrew Harper, the humanitarian coordinator in Jordan for the UN High Commission for Refugees, said: “The desperation of the people in Syria is rising and we are not seeing any indications that the situation is going to get better any time soon.”

A million people have already fled Syria for neighbouring countries and Jordan alone could have a million within its borders by the end of 2013.

Mr Harper said: “I still think we are at the preliminary stages of a mass migration from Syria to Jordan.

“Jordan can’t continue to take hundreds of thousands or a million with nice words from the international community.

“We need significant support and investment. We are all running out of money. People expect us to do the impossible and we are facing a looming disaster.”

Later the Prince and the Duchess visited Jerash, one of the best-preserved Roman cities in the world, where they were given a guided tour of the streets, temples and amphitheatre.

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