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Strategies & Market Trends : The Residential Real Estate Crash Index -- Ignore unavailable to you. Want to Upgrade?

To: Jim McMannis who wrote (217196)	8/24/2009 6:30:17 PM
From: Giordano Bruno	Read Replies (2) \| Respond to of 306849

Goldman Sachs' streak of bad publicity continued Monday as The Wall Street Journal detailed the company's "trading huddles," where certain, preferred clients got short-term calls from analysts that didn't always jibe with their long-term forecasts. "Critics complain that Goldman's distribution of the trading ideas only to its own traders and key clients hurts other customers who aren't given the opportunity to trade on the information," The WSJ reports. Goldman tells the Journal that no clients were disadvantaged by the "huddles" and that many of its clients are not particularly interested in short-term trading calls. That may be true, but securities laws "require firms like Goldman to engage in ‘fair dealing with customers,' and prohibit analysts from issuing opinions that are at odds with their true beliefs about a stock," The Journal says. Whether or not this practice violates securities law or leads to any regulatory backlash, "this is the sort of issue that will prick the ears of [NY Attorney General Andrew] Cuomo and the SEC," says Mark DeCambre, Wall Street reporter for The New York Post. "It's about transparency. If you treat one set of your clients differently than other clients, that's not particularly advantageous." To be sure, this may be much ado about nothing and Goldman shares rallied sharply early Monday, before fading in the afternoon with the broader market. Still, if nothing else, this "trading huddle" story is another black eye for the white shoe firm, whose summer of discontent has so far featured: Matt Taibbi's blistering "vampire squid" feature in Rolling Stone. Rumors of Goldman front-running the market via high-frequency trading software after one of its former developers was arrested for allegedly trying to steal is proprietary trading code. A New York Times story detailing former Goldman CEO Hank Paulson's numerous calls to current CEO Lloyd Blankfein last fall, when Paulson was Treasury Secretary and Goldman was one of many firms in line for government largess. Regarding the latter issue, current Treasury Secretary Tim Geithner denied Friday any of the bailouts last year "had anything to do with the specific interest of any individual firm, much less Goldman Sachs." DeCambre, among many others, isn't convinced: "Of course Goldman Sachs gets favoritism when it comes to treatment from government officials," he says.