Firstly, there's the issue of disclosure. Should Goldman have publicly disclosed to shareholders that this specific probe was underway ? According to Bloomberg, Goldman received a Wells notice some nine months ago, and the firm and regulators have been locked in talks on this issue for some time. But although Goldman did have a general note to its 2009 annual report that it had 'received requests for information from various governmental agencies and self-regulatory organisations relating to subprime mortgages, and securitizations, collateralized debt obligations and synthetic products related to subprime mortgages', it would perhaps have been more prudent to have flagged-up the specific discussions about the transaction that has led to the fraud charge.
But did Goldman actually know that the fraud charge was coming down the pipe ? The SEC released the news late Friday morning in the US, yet it was at least an hour before even the briefest retort came from Goldman, and it took several more hours before a more comprehensive rebuttal was published. Some are suggesting that Goldman was wrong-footed, and was not expecting the SEC to move as quickly as it did.
And then there's been some comment on the timing of the SEC press release itself. Why do this on a Friday ? BarCap banking analyst Roger Freeman, for one, thinks it's to do with the financial reform overhaul proposals which are dividing US lawmakers, particularly some Republicans who are known to be holding out for a more benign bill. The New York Post reports that Freeman said in a research note to clients Friday: 'Targeting GS, given the flurry of anti-Wall Street press that has centered around that firm, offers the publicity that the administration needs at this critical juncture' to force lawmakers to get tougher reforms passed.
Finally, there's the theory that the SEC went public on Goldman on Friday hoping to hide its own incompetence. Yes, a report was also released that day, which said that the regulator was aware that R. Allen Stanford was operating a Ponzi scheme since at least 1997, yet did nothing.