Here is the flip book that is part of the Goldman Sachs SEC Fraud Charge:


Hat Tip SF

Category: Derivatives, Legal

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12 Responses to “Goldman Sachs Abacus-2007-Flipbook”

  1. VennData says:

    I’ll wait until it comes out on iPad. …unless Apple decides that we shouldn’t see this sort of thing in an app.

    Who’s their ibanker, again?

  2. bman says:

    Five pages of disclaimers after the coverpage, and right there on the next, in somewhat small print, it says you could lose all of your principal value. It does appear they knew what they were doing.
    They spell it out, right in print. I am particularly fond of the risk factors page. ( I might just keep on reading :)
    It would be neat if all the legal jargon finally snags some crooks on crooked intent charges.

  3. vachon says:

    The BBC World News is reporting on the suit tonight. They are saying that GS is not settleing and allowing this to go to court because GS doesn’t want to be lumped in with Madoff, etc. Jim Cramer’s newsletter tonight says that the DA is overreaching and has a weak case.

    Guess it’s like that old line, “We’ve already established what you are. Now we’re just haggling about the price.”

  4. jonpublic says:

    I fail to see the issue here. Paulson isn’t connected to ACA in any way according to the book. I don’t know what the SEC thinks, but clearly they are wasting taxpayer resources here.

  5. [...] were material misstatements of facts and significant omissions performed in the selling of the Abacus 2007 securitized [...]

  6. dr.j says:

    Read the disclaimers. It could not have been any more understandable that, basically ,they were saying “we have a bag of shit. Here are all the ways this bag of shit can stink. The current holders of the shit would like you to buy the shit. They make no representations. Oh, it’s synthetic shit. So, it’s not really shit, you just get all the attributes of shit. You’ll be sorry you bought the shit.” Now, does it really matter that Paulson picked the shit? Why would anyone buy it in the first place?

    What a complete bunch of irresponsible assholes. By the way, would anyone have considered buying anything this far out on the risk curve if interest rates had not been held so low for so long?

    Finally, why does the government not scrutinize their own actions and law writing the same way? I would love to see 8 pages of disclaimers on the “health care reform” (we snuck in student lending)

  7. cognos says:

    Good comments here.

    I am surprised that the SEC does not realize, Goldman just brokers the deal. The buyer is sophisticated. Has $10m/yr guys making decisions, hires “experts” and modelers, lawyers and accountants. The buyer WANTS to buy this type of stuff!

    The seller WANTS to sell it. The future is uncertain. Caveat Empetor?

    No wait, Goldman should ONLY sell investment risk that MADE money in 2008 (wtf?!?). Then in 2009 they should STOP you from selling. They KNEW things were getting better. Yet they let clients sell.

    Another funny, sad aspect is that whatever undisclosed “influence” Paulson had on the product mix of deals that made up the CDO. This DIDNT really matter! Every other selection performed similarly. So the single salacious detail (“Paulson was involved, said “no to wells fargo product, yes to this other crap””) — that didnt really CAUSE the economic loss. The stuff Paulson said “no” to, probably did just as badly.

  8. DCS says:

    I was inclined yesterday to generally agree w/ most of the above comments…we’re talking about highly educated “sophisticated” boys and girls who should know *exactly* what they’re buying. GS also spells out in the risk disclosure that they have no intention of revealing all of the material facts/risks:

    Goldman Sachs may, by virtue of its status as an underwriter, advisor or otherwise, possess or have access to non-publicly available information relating to the Reference Obligations, the Reference Entities and/or other obligations of the Reference Entities and has not undertaken, and does not intend, to disclose, such status or non-public information in connection with the Transaction. Accordingly, this presentation may not contain all information that would be material to the evaluation of the merits and risks of purchasing the Notes.

    But, it seems to me if the media reports are correct — a big if, I know(!) — about Paulson’s role in selecting the underlying securities, than all of the info in the flipbook about ACA (page 28) and its selection process, “industry professionals,” and “investment committee” seems like an gross misrepresentation of material facts.

    Simon Johnson at Baseline Scenario has an interesting piece on this whole mess ( ). Looks like things may be about to get really interesting for GS, and maybe Wall Street in general :-)

  9. Per Kurowski says:

    But the whole truth and nothing but the truth would in the case of ABACUS 2007-AC1 have to include the following facts, no matter how politically or agenda inconvenient they might be.

    IKB the German bank bought the two tranches of ABACUS 2007-AC1 almost exclusively because of the following two reasons:

    First both tranches, the A1 paying Libor plus 85 basis points, and the A-2 paying Libor plus 110 basis, points were rated Aaa by Moody’s and AAA by S&P when purchased by IKB.

    Second, in order to invest $150 million in these securities, which because of their ratings were risk-weighted by Basel II at only 20%, IKB needed only to have $2.4 million of capital, 1.6%, when compared to the $12 million it would be required to have if lending that amount to unrated small and medium sized German companies.

    If IKB had known that Paulson had had his hand in the picking and known fully about his motives then they might have asked for a slightly higher interest rate, perhaps 10 basis points, and still bought the securities.

    If the securities did not have the splendid credit ratings assigned to them by the credit rating agencies then they would probably not have bought them even if Mother Teresa had done the picking.

    If the regulators had placed the same type of capital requirements on all assets then IKB would have stayed home, probably lending to their traditional clients, instead of going to California to dig prime rated subprime gold.

    And so while naturally we should lend all our support to efforts to eliminate wrong-doings like those described in the action by the SEC against Goldman Sachs that should not signify we take our eyes of the unfortunate truth of the world having been saddled with grossly inept regulations and who created grossly bad regulations.

  10. [...] an underwriter in connection with a private placement of securities. Here is the so-called “flip book” that Goldman prepared.  In it, Goldman is identified as the sole initial purchaser. This [...]

  11. [...] against the SEC’s allegations of civil fraud in its Abacus CDO — and the pitch-book for the [...]

  12. Andrew_Sea says:

    Isn’t it about time that the media outed GS for its complicity in getting the Rating Agencies to “certify” this Abacus entity as investment grade? It is my understanding that the “investment houses” paid the rating agencies “incentives” for the research required to give new investment vehicles “the seal of approval”. But, because of the complexity of these “sophisticated” securities, these triple-A ratings were issued based on the biased (fraudulent) assurances of the investment house specialist/s!!!! The rating agency folks quite frankly lacked the skill, experience and economics background to understand/determine the risks of these instruments?

    So why is there this deafening silence / absence of public news about any investigation and criticism of the Rating Agencies. Why?

    Why haven’t their executives been brought to task. Why are the proposed new financial services regulations not explicitly regulating these privileged entities? Why is the media not asking questions about these executives, about their greed, about their bonuses, and about the fraud they perpetuated?? And why aren’t the WSJ, W.Post, etc publishing the facts about GS’ opaque associations with the Rating Agencies?? Is there a symbiotic dependence by these publications, whereby they wish to avoid upsetting the apple-cart??