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Gretchen Morgenson in NY Times.....Good read. Click on header for full story. Snippet with the "O" pasted below.
Case Sheds Light on Goldman’s Role as Lender in Short SalesThe most famous litigation alleging violations of short-sale regulations was brought in 2007 by Overstock.com, a closeout retailer based in Salt Lake City, and a group of its shareholders. Overstock and its chief executive, Patrick M. Byrne, contended that abusive naked short-selling had driven down the company’s share price and harmed its capital-raising efforts. A slightly different group of 11 Wall Street firms, Overstock said, essentially created stock out of thin air that could be sold by investors. Overstock shares were exceedingly hard to borrow; fees ran as high as 35 percent. Some of the firms settled with Overstock in 2010, paying $4.4 million in total. Others were removed from the case, leaving Goldman and Merrill Lynch as defendants. The court subsequently dismissed Goldman from the suit, but the firm settled with Overstock on a refiled case last June, paying an undisclosed amount. On Thursday, Overstock announced that Merrill was settling the case with a $20 million payment. The Overstock suit generated a trove of emails and other documents that shed light on questionable Wall Street practices in the securities lending arena. For example, in a deposition in the case, which Goldman had sought to seal, Marc Cohodes, the former head of Copper River Partners, said that he had paid Goldman more than $100 million to handle its short sales over many years. But in the deposition, he said he soon began to doubt that Goldman had actually borrowed some of those shares. Mr. Cohodes also said he suspected that Goldman’s failure to borrow the shares was behind his firm’s collapse in the financial crisis. Goldman has disputed this contention. I asked Mr. Cohodes, who no longer manages money, what he thought of the S.E.C.’s recent findings on Goldman. He forwarded my request to his lawyer, David W. Shapiro, in San Francisco. In an interview, Mr. Shapiro, a former federal prosecutor and United States attorney, questioned the recent S.E.C. settlement. “I’m very curious to understand what Goldman Sachs admitted to the S.E.C.,” he said, “and why $15 million was considered to be an adequate punishment.” |
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Msg # | Subject | Author | Recs | Date Posted |
43427 | Re: Gretchen Morgenson in NY Times..... Now that the fight is over can we talk about the stock price? | berkstock3 | 1 | 2/3/2016 8:48:01 PM |