Earlier today, the NYT published an article (tucked away near the bottom of the main page of its website, of course) about Goldman Sachs settling allegations of systematic fraud with the US Securities and Exchange Commission (SEC) for $550 million. The title is a truly sly attempt at misleading the reader: “S.E.C. Settling Its Complaints With Goldman”.
If I didn’t know any better, I would think it was the SEC who’d wronged Goldman Sachs. The title suggests the SEC is settling, as if they were wrongdoers who had to settle with an aggrieved party. Furthermore, the title suggests that Goldman is vindicated. A much more accurate title would be: “Goldman Sachs Settling Its Complaints Fraud Charges with the SEC”.
But for the NYT, this is par for the course. A responsible media outlet would report the story in clear, concise and objective language. But, based on the language contained in the article, it’s not fraud to the NYT. What they say happened is that Goldman settled “claims that it misled” investors. Now, if I send out an application consisting of photoshopped grades out to prospective law firms in my search for work, and I get caught, will I be charged with “misleading” them or would the NYT and any other reasonable person categorize it as the much more applicable and serious charge of fraud?
Goldman was facing serious charges. Essentially, they were charged to have encouraged investors to purchase investments designed by another company to fail. Goldman was complicit in the market manipulation designed to have the investments fail, yet made no mention of this to their clients. This is unequivocally fraud. Goldman was lucky to have settled the case, and the fact they aren’t being prosecuted suggests the extent of the political power the firm enjoys in the State of NY and the US in general.
It gets better though. The Times reports that the “commission contended that Goldman misled investors, who were making a positive bet on housing, because Goldman did not disclose Mr. Paulson’s involvement in creating the deal.” That is definitely not the issue. Would a massive civil suit be brought, merely for the firm omitting who created the investments? Of course not. What triggered the investigation and suit was the fact Goldman knew the investments would fail (because they knew that’s what they were designed to do) and still pushed it on their clients anyway as legitimate investments.
It is sad that you have to read between the lines of one of the world’s most well-known newspapers to realize the extent of the fraud committed by one of the worlds largest investment banks. Halfway through the article, it notes that Goldman “agreed to a judicial order barring it from committing intentional fraud in the future under federal securities laws.” Which is pretty much an unequivocal admission of guilt, right? Not so, says the NYT in the same sentence, since “Goldman did not formally admit to the S.E.C.’s allegations[.]” Well I’ll be damned. They agree not to do it again but don’t admit doing anything wrong. Only an utter intellectual invalid would not see the contradiction contained in that one statement. And yet, this is somehow a commercially viable newspaper?
Keep fighting the good fight, New York Times. In these tough economic times, it isn’t easy for Goldman Sachs to make $13.39 billion a year in profit, what with those damned regulations and investigations and what-not. But as long as the public’s in the dark, I suppose we can expect more of the same.