Goldman Result Is 'Surreal'

Goldman Sachs Blink

Almost three years ago, when Goldman Sachs paid $550m to settle fraud accusations by the Securities and Exchange Commission, one of the claims was that Goldman misled the bond-insurer ACA Financial Guaranty in a horribly complex deal named Abacus.

Bloomberg News columnist Jonathan Weil writes that Goldman settled without admitting to the accusations. The terms also prohibited Goldman from denying the SEC’s allegations in its public statements. Then, last week, a funny thing happened. A New York state appeals court, in a 3-2 ruling, dismissed ACA’s lawsuit against Goldman. ACA said Goldman misled it.

The court said the insurer’s claims didn’t hold up. Goldman settled without admitting to the accusations. The terms also prohibited Goldman from denying the SEC’s allegations in its public statements. Then, this week, a funny thing happened. A New York state appeals court, in a 3-2 ruling, dismissed ACA’s lawsuit against Goldman. ACA said Goldman misled it. The court said the insurer’s claims didn’t hold up.

The case captures perfectly why much of the public detests 'neither admit nor deny' regulatory settlements. We don’t know whose facts to believe. Without trials or admissions of liability, the government’s allegations remain unproven. Sure, Goldman paid a big fine. That doesn’t establish anything. For all we know it paid the money just to make the SEC go away.

The result is surreal: Goldman still isn’t allowed to deny the agency’s claims that it misled ACA. However, a court has thrown out ACA’s claims that Goldman did, in fact, mislead it.

Hit the link below to access the complete Bloomberg article:

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Jonathan Weil joined Bloomberg News as a columnist in 2007, and his columns on finance and accounting won Best in the Business awards from the Society of American Business Editors and Writers in 2009 and 2010.

Weil was a reporter for The Wall Street Journal from 1997 to 2006, and before that at the Arkansas Democrat-Gazette in Little Rock. He grew up in Hollywood, Fla., and has a bachelor's degree from the University of Colorado at Boulder and a law degree from Southern Methodist University.

 

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