blankfein

New hound on the Goldman trail

June 2, 2011: 11:32 AM ET

Anyone who isn't investigating Goldman Sachs, please stand up.

The Manhattan district attorney's office joined the fray Thursday. Bloomberg reported Cyrus Vance Jr.'s office has subpoenaed Goldman (GS) over its alleged bubble-era habit of ripping off hapless clients on dodgy mortgage bond deals.

All isn't fine by Blankfein

The subpoenas stem from the report Sen. Carl Levin issued six weeks ago, documenting the bubble-era abuses at Goldman and Deutsche Bank (DB). The Securities and Exchange Commission and the Justice Department are already investigating Goldman over that report, which showed how Goldman exploited its supposedly valuable customers for the sake of bonus-padding profits.

When it comes to sleuthing out crimes in the mortgage meltdown, obviously, the more the merrier. A year ago Goldman coughed up $550 million to settle an SEC case on its misleading marketing practices, so it is certainly plausible that there is a criminal needle somewhere in the Goldman haystack.

But what's a little hard to figure is how prosecutors in Manhattan expect to bring a case based on the Levin report, when Levin himself made it clear that he thought the strongest case against Goldman was a charge that Lloyd Blankfein et al. misled Congress.

Lying to Congress, of course, is a crime. But it is not a crime the Manhattan district attorney has the jurisdiction to bring.

That seems to leave Vance's office in the same boat as everyone else these last few years, thrashing about in a sea of ugly but not quite incriminating documents, looking for a case to bring against the firm and its executives for failing to do right by its clients. That is a nasty way to do business but it is not, at last glance, a crime -- which is part of why there have been no perp walks of note so far from the crisis.

"It's great that they are ready to prosecute to the full extent of the law, but this looks like a nonstarter in many ways," says Anthony Sabino, a Long Island lawyer who teaches at St. John's in Queens. "If you didn't know any better you might think it was an ambitious politician looking to bolster his fortunes for the next election."

It says something about Goldman that it portrays subpoenas as part of its new normal. "We don't comment on specific regulatory or legal issues, but subpoenas are a normal part of the information request process and, of course, when we receive them we cooperate fully," it says. This despite the 2% drop Thursday in its stock, which is now down 20% for the year.

And in that regard the worse, the better: If Goldman stock keeps falling, maybe management will do something drastic and start carving the firm up in a belated bid to add shareholder value and stuff. Purely unintentionally, that could end up reducing the bill the next time we have to bail out our ridiculous financial sector.

But clearly that bet is still a long shot -- as is the wager that Vance will be able to close this case by putting rich guys in handcuffs.

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    Goldman Sachs didn't have its best year, but CEO Lloyd Blankfein still managed to walk away with $18.6 million.

    Blankfein and each of his top four lieutenants made that sum last year, Goldman (GS) said in its annual proxy statement filed Friday afternoon. Each man received $600,000 in salary, a $5.4 million cash bonus and $12.6 million in restricted stock that can't be sold immediately.

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    Fortune's Katie Benner, attending the trial in Lower Manhattan, says Blankfein has shined in this role. She suspects that when Blankfein steps aside some day as Goldman's (GS) CEO he could take a shot at the dramatic reading circuit.

    So far Wednesday, Blankfein has read aloud from these compelling MORE

    - Mar 23, 2011 2:12 PM ET
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    - Mar 23, 2011 1:45 PM ET
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    Blankfein, the Goldman Sachs (GS) CEO, testified for the prosecution Wednesday morning in the government's case against trader Raj Rajaratnam. The U.S. attorney is trying to put the founder of the Galleon hedge fund behind bars for 20 years, saying he made off with $45 million via illegal insider trades MORE

    - Mar 23, 2011 12:43 PM ET
  • Money for nothing at Goldman

    America's favorite bankers have outdone themselves yet again.

    How might you compensate management for a year in which profits plunged, you spent $550 million of shareholder money to settle a fraud investigation and your stock ended up more or less exactly where it started (see chart, right)?

    You might be tempted to nix raises or withhold bonuses to send a responsible message about linking pay to performance. But if so, you wouldn't MORE

    - Jan 30, 2011 8:25 AM ET
  • Goldman execs catch a bonus break

    At last, some good news for those embattled souls leading Goldman Sachs.

    Goldman (GS) CEO Lloyd Blankfein and his top aides are due $111 million in stock next month, mostly on delayed payouts from their record-setting 2007 bonus awards, Bloomberg reports.

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    - Dec 15, 2010 1:58 PM ET
  • Goldman glitters less

    The hurts keep coming for Goldman Sachs shareholders.

    With Thursday's 3% tumble, Goldman shares have dropped $50 each since the Securities and Exchange Commission announced April 16 that it was suing the firm for fraud in a 2007 subprime debt sale.

    The plunge – half coming the day of the SEC announcement and half since then -- has cut the firm's market capitalization by almost $26 billion.

    Perhaps even more poignantly, it has MORE

    - May 20, 2010 6:03 PM ET
  • JPMorgan's Dimon gets a scratch

    Perhaps Jamie Dimon isn't as Teflon-coated as we thought.

    Shareholders at JPMorgan Chase (JPM) voted at Tuesday's annual meeting in Lower Manhattan to defeat a proposal to split the chairman and CEO jobs, which Dimon currently holds.

    - May 18, 2010 3:45 PM ET
  • Goldman runs the table

    Only 19% of shareholders want Goldman to separate its chairman and CEO positions.

    Corporate governance gadflies have been pushing Goldman (GS) to separate the jobs, in hopes that the board would select a strong, independent chairman who would act as a check on management.

    But so much for that. Fewer than one in five Goldman shareholders voted for the proposal, which should remove some of the perceived pressure on Blankfein as Goldman MORE

    - May 7, 2010 12:46 PM ET
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