Bearing Asset Management has been short Goldman Sachs since December and they’re staying short.
Goldman stock tanked on Friday in the aftermath of the SEC’s fraud case against Goldman, but Bill Laggner stayed short and he’s not budging anytime soon. Even though this morning, Goldman just utterly smashed earnings estimates.
“We are short and we will stay short,” he told us.
“We are in the very early stages of tearing down the greatest fraud ever perpetrated on the American people.”
He says there are two very important points in the case against Goldman.
1. Was Goldman aware of fraud in the actual RMBS?
2. Did Goldman misrepresent the RMBS inside ABACUS by marketing it using the language, “securities selected by ACA.”
Laggner argues that in this most recent case, Goldman left out material information when talking to potential investors about ABACUS. Now, we might find out whether or not Goldman trades against clients frequently based on material info.
In the months to come, Laggner predicts, Goldman will play hard ball and eventually settle without admitting any wrongdoing. But they’ll never do it again and there will be more disclosure going forward, and more trading done on exchanges.
Goldman has already admitted that the firm bets against its clients (Goldman has also repeatedly explained why betting against its clients isn’t a big deal), so the disclosure will likely come in the form of more information about what clients are buying.
When more details emerge, he believes, potential Goldman clients will uncover more about Goldman’s trading against and withholding valuable information from clients. In light of those new details, the stock price will go down.
“Goldman is nothing more than a glorified hedge fund taking massive bets with taxpayer subsidies,” he says. “As more market participants realise this conflict of interest the business should contract rapidly.”
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