Goldman Sachs â trading activities in the credit insurance market in 2007 have come under attack from a US senator after e-mails revealed a senior trader urged colleagues to âkillâ some investorsâ positions.
Carl Levin, chairman of the Senate permanent subcommittee on investigations, told a hearing on Wednesday that the alleged activity âlooks like a trading abuse to meâ, although he added that at the time in question the credit insurance market was unregulated.
Mr Levin said that in May 2007, Goldman adopted a âshort squeeze strategyâ to drive down the price of credit default swaps on troubled mortgage-backed securities. Mr Levin alleged the move, which Goldman denies, would have enabled the bank âto purchase the CDSs for itself at artificially low pricesâ.
The subcommitteeâs probe uncovered a document revealing a second trader stating that Goldman âbegan encouraging a squeezeâ â a strategy that never materialised due to market conditions.
Mr Levinâs attack opens a potential new front in the controversy over Goldmanâs trading practices. In July, the bank paid $550m (â¬416m) to settle fraud charges from the Securities and Exchange Commission over an MBS sold during the financial crisis.
âWe should start killing the . . . shorts in the street,â Mr Swenson wrote in an e-mail to Deeb Salem, a trader, in May 2007. âThis will have people totally demoralised.â
Source :
http://www.ft.com/cms/s/0/b3c7978a-03e1-11e0-8dd2-00144feabdc0.html#axzz17hTzfw99
Yeah, that´s every days action at Goldman desks :"Kill investor positions." :eek:
Carl Levin, chairman of the Senate permanent subcommittee on investigations, told a hearing on Wednesday that the alleged activity âlooks like a trading abuse to meâ, although he added that at the time in question the credit insurance market was unregulated.
Mr Levin said that in May 2007, Goldman adopted a âshort squeeze strategyâ to drive down the price of credit default swaps on troubled mortgage-backed securities. Mr Levin alleged the move, which Goldman denies, would have enabled the bank âto purchase the CDSs for itself at artificially low pricesâ.
The subcommitteeâs probe uncovered a document revealing a second trader stating that Goldman âbegan encouraging a squeezeâ â a strategy that never materialised due to market conditions.
Mr Levinâs attack opens a potential new front in the controversy over Goldmanâs trading practices. In July, the bank paid $550m (â¬416m) to settle fraud charges from the Securities and Exchange Commission over an MBS sold during the financial crisis.
âWe should start killing the . . . shorts in the street,â Mr Swenson wrote in an e-mail to Deeb Salem, a trader, in May 2007. âThis will have people totally demoralised.â
Source :
http://www.ft.com/cms/s/0/b3c7978a-03e1-11e0-8dd2-00144feabdc0.html#axzz17hTzfw99
Yeah, that´s every days action at Goldman desks :"Kill investor positions." :eek:
