I certainly agree that one doesn't usually know who is on the other side of a trade, and I doubt if there is any obligation to supply that info.
But it still seems that what's at the centre of this investigation is the impression that GS gave to their clients, through reports that they issued (as presented at the current Senatorial hearing), that they should go long on the products within Abacus.
However, from their interaction with Paulson, they must have known that the products should be shorted, especially since Paulson was heavily shorting those stocks via GS.
So, it seems to me, this is not about the normal behaviour of a Market Maker who can take either side of a trade to reduce risk etc.. It's about a broker that knew that the quality of the products it was recommending to its clients was poor (in fact, it seems that GS's own staff members thought the stuff was junk), but said nothing in that regard, and on top of it heavily shorted those same products.
Isn't this almost analogous to insider trading ?
Isn't that unethical and a conflict of interest ?
I get the impression that the GS management we've seen so far are professing their innocence while, at the same time, crossing their fingers behind their backs !! {:-) |
