...Gray: The Goldman Sachs Standard Are there ethics in big business? Or does big business answer to a different power? This can be a rather gray area. The problem to be investigated is the Goldman Sachs Standard and the ethics (or lack thereof) that exist in the company. The original market strategy was to provide loans for small businesses and then sell these loans as commercial paper. (Jennings, 2012) In the 1920s, this became a tough market in which to make a profit. So, to borrow a phrase, when the going gets tough, the tough change strategies. In the late 1920s, Goldman changed its investment strategy to layered investments. This strategy involves creating a company and then personally purchasing a large amount of the shares. Goldman would generally purchase approximately 90 percent of these shares. The public, unaware of the original purchase, only saw a profitable company so they eagerly purchased not only the remaining initial shares, but also purchased shares sold by Goldman at a higher rate. Goldman would also purchase some of these to artificially inflate the market even further. This enabled Goldman to make money off of the secondary sales. Goldman was lying to its clients because the company it created was not truly as profitable as the inflated share price would indicate. It was fully aware of this and continued to layer additional companies into the strategy that would appear successful only as long as the market continued to grow. Goldman was lying...
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...February 17 Discussion Question Christopher Suto 1. What is a VIE? An entity (investee) in which the investor has obtained less than a majority-owned interest, according to the United States Financial Accounting Standards Board. A VIE refers to an entity (the investee) in which the investor holds a controlling interest that is not based on the majority of voting rights. As long as the investee is not the primary beneficiary then they do have to consolidate the company on their balance sheet. 2. How did we determine whether an entity need to be consolidated before FIN 45? Before FIN 45, “Many financial institutions were secondarily liable (without adequate disclosures) for many financial instruments held in special purpose entities” (Reinstein, 2012). The old consolidation framework used a common-sense approach, where a company should consolidate operations when they had a controlling ownership interest in another. Controlling abilities were tough to recognize and led to many unconsolidated statements. a. Explain how FIN 46 modified the guidance on VIEs. Originally FIN 46 focused only on special purpose entities and required a reporting enterprise to consolidate them. Soon FASB changed it where FIN 46 should apply to all entities where a VIE exists. Part of this decision involves more judgment now according to sec.gov. There is no bright line test and all facts and circumstances, qualitative and quantitative, should be considered. b. Explain how SFAS 167...
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...Goldman Sach vs. SEC By: Lemar Clayton The Goldman Sachs situation presents a leadership ethics dilemma. Is it okay for banks to bet against their customers to manage risk and hedge their bets? In fact, I’m willing to bet that opposing sides in the argument don’t even see this as a dilemma. “The senate subcommittee grilled Goldman executives for 11 hours because they clearly think that what Goldman did was morally wrong, if not illegal.” ("Sec charges goldman," 2010) Contrast that with Goldman’s shareholders, who probably think it’s unethical for Goldman’s executives not to hedge against a mortgage collapse. There is a middle position that says the hedging itself wasn’t wrong, it was how Goldman did it that was questionable. Goldman should have disclosed its short position and possibly even details about the origins of those CDOs to customers. Let me begin by explaining what is a CDO, Goldman takes a reference portfolio, or a bunch of bonds. A bond is a formal contract to repay borrowed money with interest at fixed intervals. Each set of bonds is senior to all the bonds below it, and they pay principle in order of their seniority. You can view it as a pyramid with different slices. The portfolio is giving a rating by Wall Street. Each slice has a different maturity and risk associated with it. The higher the risk, the more the CDO pays. Level E will take losses before D, and level C will take losses before B. It’s important to note the bonds don’t have...
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...| A brief look at one of the 10 best investment banks- Goldman Sachs | | Submitted ToHumayan Kabir Course Teacher Merchant and Investment Banking Course code: FNB 308 Submitted ByShadman Sakib (Student ID: 1264) Md. Fahad Bhuiyan (Student ID: 1271) Edward Francis Gomes (Student ID: 1290) Md. Shariful Alam (Student ID:1287) Rezaul Karim (Student ID:1643) | Dhaka, BangladeshJune 23, 2012 | AssignmentDepartment of Finance & Banking Jahangirnagar University Savar, Dhaka | Introduction The Goldman Sachs Group, Inc. (Goldman Sachs) is global investment banking, securities and investment management firm that provides a range of financial services to a substantial and diversified client base that includes corporations, financial institutions, governments and high-net-worth individuals. Goldman Sachs reports activities in four segments: Investment Banking, Institutional Client Services, Investing & Lending and Investment Management. As of December 2011, it had offices in over 30 countries, including office in financial centers worldwide. Mission Goldman Sachs Group use Business Principles rather than a Mission Statement: 1. Our clients' interests always come first. Our experience shows that if we serve our clients well, our own success will follow. 2. Our assets are our people, capital and reputation. If any of these is ever diminished, the last is the most difficult to restore. We are dedicated to complying fully with the letter and spirit of the laws...
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...From the e-Activity, examine ethical behavior within firms in relation to financial management. Provide two (2) examples of companies that have been guilty of ethics-based malfeasance related to financial management and determine why their comeuppance was deserved. The two companies that I focus on in this section are Goldman Sachs company and WorldCom in the telecom world. Goldman Sachs was charged by the securities exchange commission, with fraud because the company developed and marketed an artificial collateralized debt system. Paulson & Co had the same invested and at stake with in the equity of ABACUS as believed by ACA. In circumstance, they did not have a concern in the success. By October. 24, 2007, the investors were defrauded by omitted facts or misstatements which led to downgrading of 83% of the RMBS in the ABACUS portfolio and 17 percent were on negative watch. (SEC Charges Goldman Sachs with Fraud concerning structuring and marketing of CDO Tied to Subprime Mortgages in 2010. Goldman established to pay $550 million in a settlement (Duggan, T. 2013). The vice president of Goldman was found liable for fraud too. The WorldCom scandal is another well-known unethical scandal. WorldCom submitted the largest bankruptcy filing in United States’ history after admitting improperly accounting for more than $3.8 billion dollars in expenses. The company used acquisitions to spurt large growth. Two of WorldCom’s acquisitions included MCI Communications and MFS Communications...
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...‘Why I left Goldman Sachs’ by Greg Smith Précis by Pete Laburn Landing a job at Goldman Sachs Greg Smith is a pharmacist’s son from Johannesburg, South Africa, who won a scholarship to Stanford University in America. He grew up in Edenvale, as the eldest of three siblings in a Jewish middle class family, and earned a place among the 32 people, out of the 3000 international students, who applied for a full scholarship to Stanford. Three years later, in 2000, Greg was awarded a summer internship at Goldman Sachs. Of the intern class in any year, only 40% of students would be offered a full time job at Goldman Sachs after the summer. The internship programme was very strenuous and difficult, but showed that the firm took its culture seriously and taught all potential employees about giving clients good service. The internship programme gave students an opportunity to show their merit over a 10 week period as opposed to relying on a 30 minute interview. The firm stressed the importance of giving clients the correct information, not making things up or exaggerating, but being upfront and honest, even when you make a mistake. Teamwork was also highly valued at Goldman Sachs. From Goldman’s first days until 1999 (130 years) it had prided itself on serving as an adviser to its clients, with fiduciary responsibility. A fiduciary stood in a special position of trust and obligation where the client was concerned. This role was applicable when the firm was advising the client about...
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...Ethical Dilemma: Goldman Sachs Was Goldman Sachs Socially Responsible? Pamela Bryant Northcentral University Abstract Illegal and unethical activity was prevalent in the Goldman Sachs administration and the charges filed against them by the SEC were inevitable. The underlying thought at Goldman Sachs amidst the allegations was a social purpose and a contribution to the economic cycle. While there were many gray areas of activity, this research will focus on the investment strategies used to control the clients financial investment gain and in most cases loss. Furthermore, this paper will outline the unethical behavior that was associated with the fraudulent transactions of Goldman Sachs as it related to the clients and public investors. Was Goldman Sachs Socially Responsible? The problem to be investigated is whether Goldman Sachs violated its own Code of Ethics in dealing with clients and public investors. According to the Preamble of the Business Code of Ethics, Goldman Sachs believes the highest standard of integrity should be included as the focal element in a business relationship. Regardless of how perceptive one might be in understanding the investment strategies of Goldman Sachs or even its relationship to the difficulties of the market, it is clear that not all activities were in accordance with the good old-fashioned law of principle and ethics. Background Goldman Sachs history has never been clear of controversy, dating back to its inception in...
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...Executive summary – Goldman Sachs The Goldman Sachs Group, Inc. is a leading global investment banking, securities and investment management firm that provides a wide range of financial services to a substantial and diversified client base that includes corporations, financial institutions, governments and high-net-worth individuals. Founded in 1869, the firm is headquartered in New York and maintains offices in all major financial centers around the world. They report their activities in the following four business segments: • Investment Banking • Institutional client services • Investing & lending • Investment risk management Goldman Sachs commits people, capital and ideas to help our clients, shareholders and the communities we serve to grow. The firm also provides mergers and acquisitions advice, underwriting services, asset management, and prime brokerage to its clients, which include corporations, governments and individuals. The firm also engages in market making and private equity deals, and is a primary dealer in the United States Treasury security market. Former employees include Robert Rubin and Henry Paulson who served as United States Secretary of the Treasury under Presidents Bill Clinton and George W. Bush, respectively, as well as Mark Carney, the governor of the Bank of Canada since 2008, Mario Draghi, governor of the European Central Bank and Mario Monti, the Prime Minister of Italy. As of 2009, Goldman Sachs employed 31,701 people worldwide...
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...Merrill Lynch and Co. was formed back in 1914 as a small investment firm on Wall Street, but over time grew into one of the largest firms in the world. In 1971 the company went public and at the time they were managing over 1.7 trillion dollars in assets. However come 2007 and the financial crisis Merrill Lynch and Co found themselves only days away from declaring bankruptcy. Bank of America Corporation is an American multinational banking and financial services corporation, is the largest bank holding company in the United States by assets, and the second largest bank by market capitalization (Top 50 bank, 2011). At the same time Merrill Lynch and Co was having trouble with consecutive multi-billion dollar loss quarters, Bank of America was in talks with Lehman Brothers about a possible acquisition. However the government could not make any guarantees to Bank of America for funding so talks died down in the last hours. Thus setting up what many professionals in the financial sector deem as the “Deal from Hell”. The exact cause of the downfall of one of the largest financial institutions in the world is up for debate among professionals from that field. According to some the collapse of Merrill Lynch started earlier in the years of 2006-2007 and can be widely attributed to then CEO Stanley O’Neal. According to Barry Grey, “The 93-year-old firm announced it had lost over $2.2 billion in the third quarter and written off $8.4 billion in failed investments, of which $7.9 was...
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...Too Big To Fail Chapter 19 Setting This chapter starts with Lloyd Blankfein, CEO of Goldman Sachs (GS), thinking about his company’s future. Stock market is dropping and the regulators still haven’t decided on what, when and how to fix the financial system. Henry “Hank Paulson” the US Treasury Secretary at the time, strongly believes the only way to build confidence in the market place was to have the government pass the Trouble Asset Relief Program (TARP). He had a big task ahead of him because it would be difficult to get lawmakers to agree his plan. Currently Wachovia another well known bank is in crisis. Its two month old CEO, Bob Steel, is trying desperately to broker a deal without government intervention, with either Citibank or Wells Fargo and Company (WFC) to save his bank. In the meantime, investors’ confidence in Morgan Stanley is waning and the company is urgently trying to close a deal with the Japanese company Mitsubishi to get more capital on the books. Companies across the board are trying to become more liquid in the tight credit market. Major Players Hank Paulson is trying his best to reach an agreement with Congress, so he can get TARP passed as quickly as possible. He dislikes politics but knows he has to work with the politicians or his bill would die. His solution to the financial crisis is TARP and working with lawmakers would be the only way to get this done. To get Congress on board, he would also have to work with the chairwoman of the Federal...
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...service internet platform. We believe Mannesmann underpay for acquiring Orange. Although referring to past mobile transaction table, which assumes control premium - Exhibit 8, Mannesmann was relatively paid more as EV/Sub is 8,857x and EV/POP is 533x, which are higher than means for controlling deals, which are 6,530x for EV/sub and 330x for EV/POP in Europe and 4,569x and 203x respectively in U.S. However, transaction in same industry doesn’t necessarily reflect firm-specific characteristics, thus we developed a proximate synergy valuation model based on Goldman Sachs’ valuation on synergy of Vodafone&Mannesmann (V&M) deal. First, we calculate V&M’s synergy value of £28,891 million from all the parameters from Exhibit 10 in the case (detailed DCF valuation referred to Appendix 1). Second, we derived synergy for mobile data business of £5,778 million from Lehman Brother’s 20% estimation based on Goldman Sachs’ valuation....
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...JS 5/1/2013 POLS 3315-001 Party Issue Valuations and Reassessments Why do political parties in the United States abandon or revisit specific issues? Moreover, what is the driving force behind a party making an issue politically salient? Some examples that could be correlated with these questions could be why the Republican Party has stayed silent on issues that many old-guard Democrats feel is contentious in the current administration, why the sudden recent ideological transformation of conservative party, or why many politicians steer clear from Wall-Street related subjects (even though lashing out against bankers these days is sure to garner some attention, and most likely support from the general public). All of these examples and more will be discussed in order to provide a sufficient answer as to why issues are left behind in the dust or put out prominently on display. There are numerous factors and variables to consider when trying answering such a question, one of which could be racial factors. It’s been largely documented that Latinos have been an increasingly growing electorate, going from 1 percent of voters from the 1950s to over 11% in the twenty-first century (Abramowitz 27). With this information in mind, it would make sense that the Democratic establishment is today trying to initiate immigration reform in the United States Senate, knowing that they’ll have an increasing amount of support from their Latino electorate. It should also be noted that although...
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...effectively helps in motivating the employees and improves communication processes both internal and outside public relations. Let us now look at the goals which Goldman Sachs has set for itself, identified from its vision & mission statements, business principles and its various public reports. * To provide superior returns to its shareholders. Goldman Sachs believes that profitability is critical to achieving superior returns, building their capital, and attracting and keeping the best people. This is a very quantifiable goal and its measured every quarter and is a primary indicator of the health of the firm. It thus relates to measurability of the SMART model1. * Strive to anticipate the rapidly changing needs of its clients and to develop new services to meet those needs. Goldman Sachs is primarily in the service industry which is highly competitive. Thus to ensure that it stays ahead of the competition, it is imperative for Goldman Sachs to continuously evaluate the requirements of its clients and ensure that they are being met.It thus focuses on specificity as mentioned in the SMART criteria. * To identify and recruit the very best person for every job and to offer them the opportunity to develop their career faster than anywhere else. Goldman Sachs is a people driven firm and consider them as their...
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...Case Study for Designing Channel Systems Cardenas Mike Lawrence BSBA MM 3-1 Submitted to: Ms. Anna Corina G. Kagaoan Introduction Business paper was initially presented more than 100 years prior, when New York vendors started to undercut their term commitments to merchants that went about as go betweens. These merchants would buy the notes at a rebate from their standard worth and after that pass them on to banks or different financial specialists. The borrower would then reimburse the speculator a sum equivalent to the standard estimation of the note.Marcus Goldman of Goldman Sachs was the primary merchant in the currency business sector to buy business paper, and his organization got to be one of the greatest business paper merchants in America taking after the Civil War. The Federal Reserve additionally started exchanging business paper alongside treasury bills from that time until World War II to raise or lower the level of financial stores coursing among banks.After the war, business paper started to be issued by a developing number of organizations, and in the long run it turned into the head obligation instrument in the currency market. A lot of this development was encouraged by the ascent of the shopper acknowledge industry, the same number of Mastercard backers would give cardholder offices and administrations to traders utilizing cash produced from business paper. The card backers would then buy the receivables put on the cards by clients from these dealers...
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...Bloomberg News Coca-Cola Is Said to Weigh Investment in Spotify Service By Andy Fixmer and Duane D. Stanford on October 11, 2012 * Tweet * Facebook * LinkedIn * Google Plus * 0 Comments * Email * Print More from Businessweek * * Odd Jobs: The Picasso of Parking Lots * * Post-Debt Crisis, No Consequences * * The Other Affirmative Action Battle: Thomas v. Wells * * The World's First 3D-Printed Guitar * * Algae Are a Growing Part of San Diego's Appeal Companies Mentioned * KO Coca-Cola Co/The * $38.23 USD * 0.12 * 0.31% * GS Goldman Sachs Group Inc/The * $120.2 USD * -1.79 * -1.49% Market data is delayed at least 15 minutes. Company Lookup ------------------------------------------------- Top of Form Go Bottom of Form Coca-Cola Co. (KO) is in discussions to invest about $10 million in Spotify Ltd., the subscription music-streaming service, according to two people with knowledge of the discussions. An agreement isn’t assured, said one of the people, who sought anonymity because the talks are private. An agreement may be reached in the next few weeks, Sky News reported yesterday, citing people close to the beverage company. Coca-Cola, owner of the world’s most-valuable brand, has increased its ties to entertainment so it can market products to young consumers in a subtle way. The Atlanta-based company reached a deal in April to add Spotify to its...
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