Goldman Sachs (GS) stock is up $2+ as the rest of the market crashes.But wait. How can this be happening? It’s Public Humiliation Day! Goldman’s executives are getting chewed into ground beef on live TV! (And they really are). How can the stock be going up?
The stock is going up because the market is breathing a collective sigh of relief that Congress didn’t actually find anything truly incriminating. Public humiliation makes great entertainment. But by tomorrow afternoon, it will mostly be forgotten.
Next up, the settlement. Expect it to run $1 billion or more.
We heard some scuttlebutt this morning that the SEC is going to refuse to settle this case unless Goldman admits guilt, which Goldman is NOT going to do.
We find this stance by the SEC highly unlikely–decades of SEC settlements have been based on the premise of no lo contendere (neither admit nor deny), and forcing Goldman to admit guilt would be a huge change that would prevent many future settlements.
But we can understand why the SEC would want to force an admission, and in this environment, anything’s possible. Goldman would never admit guilt, though, because that would open it up to billions of dollars of judgements in shareholder lawsuits and other civil cases. So if the SEC goes that route, we’re going to court…
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