The Case Against Goldman Sachs

El viernes pasado la SEC presentó una acusación al banco de inversión Goldman Sachs (GS) por fraude. Básicamente la acusación se basaba en el incumplimiento para disclose información. Resulta que existe un señor Paulson que tiene un hedge fund, y es conocido porque le gusta tomar posiciones short (o de corto), que fue a GS y le pidió que le arme un instrumento para él poder tomar una posición short.

Breve repaso de cómo es el tema con las hipotecas. En general las agencias gubernamentales que proveen financiamiento, Fannie Mae y Freddie Mac principalmente, agrupaban las obligaciones de los distintos acreedores hipotecarios de acuerdo a características que no vienen al caso, las securitizaban (tipo fideicomiso como hace acá Garbarino entre otros), y las salían a vender al mercado. El objetivo es tener cash hoy en vez de obligaciones a cobrar futuras. La posición long la tiene quien compra estos pools de hipotecas, y la posición short la tienen todos los deudores hipotecarios individuales.

Volvemos a GS. Paulson ELIGIÓ con qué grupos de hipotecas quería que arme un instrumento (CDO), que al ser sintético, es decir, no son las agrupaciones originales que están respaldada por los flujos futuros de ingresos de los pagos mensuales de los dueños de los hogares americanos con hipotecas, sino que estos CDOs son instrumentos cuyos activos son estos fideicomisos respaldados por las hipotecas. O sea, quien compra un CDO, toma la posición long, es dueño de cuotapartes de distintos fideicomismos o pools de hipotecas, pero así como hay alguien que es dueño de esto, TIENE que haber alguien que esté short.

Por qué alguien estaría short? Porque piensa que los precios de las viviendas están muy altas y que van a caer de valor, por lo cual los deudores de hipotecas de esos activos van a verse que están pagando por algo más de lo que vale en el mercado en ese momento, van a dejar de pagar, por lo cual van a volver a estar en manos de estas agencias sin éstas contar con compradores.

El fin de la historia es que GS creo este CDO que salió a vender al mercado, SIN DISCLOSE, que quien tomaba la posición short era este señor Paulson que además había HANDPICKED qué pools de hipotecas quería que formen este instrumento, y al poco tiempo el 80% de la cartera de las hipotecas había disminuido considerablemente su valor. Quienes compraron este instrumento fueron principalmente bancos y clientes institucionales que no son carmelitas descalzas y saben lo que están comprando, pero NO SABÍAN que Paulson había handpicked en qué securities quería estar short. Hubiese sido distinto si GS las hubiera eligido por el motivo que sea, y después cada inversor elige de qué lado quiere estar, acá hubo un claro caso de falta de disclosure pues si los que estuvieron long hubiesen sabido que Paulson había handpicked los securities para shortearse es altamente probable que no hubiesen comprado.

Últimas dos consideraciones. Primero, que es una práctica usual no disclose quién ocupa la posición short, pero por el otro lado, supongo yo, no solía pasar que una parte elija los activos que componían los CDOs, y por último, una frase para que abran el pdf a continuación que es un artículo del WSJ…..”yo no creo en las brujas, pero que las hay las hay”

SOLO PARA NERDS:

The SEC's Impeccable Timing

The Goldman suit helped to hide the IG report on the Stanford debacle.

The Securities and Exchange Commission fraud case against Goldman Sachs may be settled before it ever sees a courtroom. Yet intentionally or not, the SEC has already secured at least one victory in the court of media opinion.

Last Friday, the same day that the government unexpectedly announced its Goldman lawsuit, the SEC's inspector general released his exhaustive, 151-page report on the agency's failure to investigate alleged fraudster R. Allen Stanford. Mr. Stanford was indicted last June for operating a Ponzi scheme that bilked investors out of $8 billion. He has pleaded not guilty.

Guess which of these two stories was pushed to the back pages? The SEC did its part by publishing the Stanford report so deep in its Web site that more than a few of our readers had trouble finding it. Yesterday, the SEC management's response to the report was available on the agency's homepage, yet it provided no links to the report itself.

Little wonder. The report is damning for an SEC that wants the public to believe it has turned the corner after the Bernie Madoff disaster. The commission has made young Fabrice Tourre of Goldman Sachs a household name for his debatable disclosures to institutional investors. But many individual investors will be more interested in learning the story of Spencer Barasch. He's the SEC enforcement official who sat on various referrals to investigate Allen Stanford and then, after leaving the SEC, performed legal work for . . . Allen Stanford.

In its own way, the Stanford calamity is arguably worse than the SEC's Madoff bungle. In the Madoff case, passionate outsider Harry Markopolos could find no one at the SEC who took the time to understand the scam, cared enough and had enough authority to shut down the fraud. In the Stanford case, we see numerous SEC insiders over many years urging—at times begging—the enforcement staff to take action, to no avail.

The examination staff at the SEC's district office in Fort Worth, Texas reviewed the Stanford Group's operations in 1997, concluded that its sale of certificates of deposit likely constituted a Ponzi scheme, and referred the matter to SEC enforcement staff. Mr. Stanford kept on selling his seemingly too-good­to-be-true CDs, so SEC examiners investigated again in 1998, 2002 and 2004. Each time, they concluded that the Stanford operation was a probable Ponzi scheme and urged SEC action. Each time, the enforcement staff failed to act.

The SEC's Impeccable Timing -WSJ.com 4/20/10 12:17 PM

Along the way, SEC enforcers also ignored warnings from the daughter of an elderly investor in the Stanford scheme, the Texas State Securities Board, an anonymous insider in the Stanford operation, and

U.S. Customs, which suspected that the Stanford organization was laundering money. The SEC at times would open preliminary investigations. When the Stanford Group declined to provide information, the inquiry would end.

Particularly tragic is that almost all of the $8 billion that Mr. Stanford collected from investors was gathered after the SEC's first round of inquiries, so if SEC enforcers had acted on the first referral from their colleagues, this alleged fraud would be measured in millions of dollars, not billions. Later, some investors increased their investments with Stanford Group after they learned that the SEC had investigated in 2005 and took no action. They viewed it as a clean bill of health.

In the wake of its Goldman lawsuit, the SEC is being hailed for returning to a "tough" enforcement line, but this is deceiving. The contrast between the SEC inspector general's report on Stanford and the zeal of the SEC's pursuit of Goldman Sachs is far more revealing about why the agency fails to stop genuine fraudsters.

While taking testimony and conducting interviews with dozens of agency staffers on Stanford, SEC IG David Kotz asked the enforcement staff how it could possibly have failed to prosecute someone who was believed by so many others to be running a fraud. The staff told him that senior SEC management did not favor the pursuit of Ponzi schemes and other frauds that were difficult to investigate and time­consuming to prosecute. He was also told that management favored "quick hits" and "Wall Street" cases.

This makes perfect sense when you think about the political incentives. Why do the painstaking work of tracking down actual criminals when you can score favorable headlines with a drive-by lawsuit against a large public company that will have a strong incentive to settle quickly?

In other words, the SEC is a dreadful failure in fulfilling its core mission of protecting individual investors, as the Stanford and Madoff cases show. But the SEC is very good at nailing politically correct targets like Goldman years after the fact on charges that have little or nothing to do with the investing public. On the Goldman case, by the way, the news broke yesterday that the SEC commissioners split 3­2 on whether to bring the lawsuit—a rare partisan split on such a prominent case and further evidence of its thin legal basis.

In the cases of Stanford and Madoff, thousands of small investors lost their life savings. In the case of Goldman, some masters of the financial universe lost money on what they knew was a calculated gamble. Which did more societal harm?