Business Analysis of Goldman Sachs

Table of Content

The stake holder of Goldman Sachs are it stockholders, investors and those who conduct various financial transactions with the company and have any vested financial in the company. The impact that Goldman Sachs has had on it’s stakeholders has taken a n financial toll on many as there investments were lost the public perception of Goldman Sachs and many companies like them has changed dramatically due to the errors of their ways. When a company as large as Goldman Sachs gets accused of fraud and bad investments when they were previously thought of and sound business investments it send a shock to the financial markets around the world.

The damage to Goldman Sachs reputation extends beyond the immediate crisis, because this type of business depends on the reputation that precedes them making them now a target of ridicule in the business world. Many different commentators on the Goldman Sachs scandal say there were no ethical values from there top CEO’s that they made a gamble and careless decisions and poor choices for the company. “As a global investment bank and financial intermediary, Goldman Sachs integrates advice, financing, market-making, co-investing and asset management with its risk management capabilities to serve a broad range of largely institutional clients”. ww. cbsnews. com With that being said Goldman Sachs has a certain level of responsibility to the stakeholders and to the general public they are doing business with to conduct themselves in a fair and honest manner while working within the best interest of the clients. Since Goldman itself made a profit by betting against the mortgage investment which it sold to its customers the guilt was quite evident as more information was discovered. “The instrument in the S. E. C. case, called Abacus 2007-AC1, was one of 25 deals that Goldman created so the bank and select clients could bet against the housing market”. ww. newyorktimes. com Once the abacus deals fell in value Goldman and their hedge funds made a profit on their negative bets. As for clients who bought into this scheme, they lost billions in their investment dollars. The financial sector needs an overhaul in recent years there have been many scandals and schemes that have shook the financial world and exposed more than they have wanted the public to know. Securities and Exchange Commission filed a civil lawsuit against Goldman and Sachs. The product was new and complex but the deception and conflicts are old and simple” said Robert Khuzami, Director of the Division of Enforcement. www. sec. gov/news/press The SEC’s is continuing their investigation on the practices of investment banks such as Goldman and Sachs due to the distressed housing market. The SEC is stating that Goldman Sachs VP is responsible for Abacus 2007-1, once the Abacus portfolio downgraded, investors in the liabilities of Abacus allegedly lost up to one billion dollars as a result of this scheme, while Goldman Sachs profited in its earnings.

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Goldman Sachs had wrongly and knowingly permitted a client that was betting against the mortgage market to influence the mortgage securities which included a large investment portfolio. After the SEC announced it would bring a civil suit against Goldman and Sachs there stock fell to more than ten percent within the first half an hour of trading, once the market closed Goldman Sachs had lost almost ten billion of the company’s market value. Many other firms were also on the alert to see if they too would be involved in scandals such as Goldman Sachs and were taking precautionary measures to avoid the same fate.

Goldman Sachs made a statement claiming that they had been involved in any scheme to sell clients mortgage linked securities that they did have confidence in or knew of possible failure simply blaming the collapse of the house market as a contributor to the failed plan…. Goldman Sachs is also claiming to be victims stating they had no first hand knowledge of the possibility of the housing market collapsing in the future , assessing that Goldman Sachs has lost 1. 7 billion has a total result of this also claiming there standards to be high with regards to their clients and the way they conduct business.

Goldman Sachs has made claims that they never made or created products which were intended to fail, they feel they have done no wrong. Federal consumer laws help to protect the interest of consumers from becoming victimized by unethical businesses. Factors that may have contributed to Goldman Sachs being non compliant are the ways in which business was being conducted non traditional ways of doing business in a virtual world allowed for many things to go unnoticed.

Strategies were not utilized to expose that various risk may not have played out to be as effective as they may have previously been projected to be. Goldman Sachs went around the issue delivering a lot of impenetrable information rather than direct answers relating to their involvement in this issue. Moving “consumer protection” to the Federal Reserve is a way to make sure political pressure is deflected. www. cnn. com The states are generally the first to respond to consumer protection laws they ensure that the problem does not spiral out of control putting the consumer and public at risk.

Goldman Sachs was given a subpoena for failing to turn over key documents as evidence and also not providing information on key employees and not making them available for questioning by federal investigators. Due to the government calling for further investigation into the Goldman Sachs scheme employees have since began to provide information as requested, it will be determined if these individuals will be charged with anything at all al they may not have had direct involvement but having the knowledge of this information may present some consequences.

Many of Goldman Sachs employees and connections have very close ties to government man of their major players have spoken on their behalf to government it may all relatively be related to the billions that are involved in this case as many of their investors want to see justice and many other want to make more money the end factor is the dollar figure behind this entire issue. What Goldman did to its clients may have been unethical by many standards but according to them it was not in their code of ethics so therefore it was business as usual claiming that the client was always their major concern.

Ethical issues are present throughout Goldman Sachs and surrounding the entire Abacus deal, executives and advisors were aware, somehow they seemed to have formed a way to rationalize there unethical actions in doing business. Questions presented by the SEC in regards to the ethical factors in this case such as did they know that the investment would fail and intentionally direct clients to do business under false pretenses, was there adequate information disclosed and the plain facts stated in providing clients with sound and truthful information.

In 2003 Goldman Sachs had prior issues with their ethical standards; they admitted that they had violated the anti-fraud laws. Goldman Sachs paid over 9. 3 million in penalties, as it appears Goldman Sachs is no stranger to unethical behaviors in business. Many of Goldman Sachs former supporters are taking aim against Goldman Sachs through challenging public comments and in some areas public protest have taken place against not only Goldman Sachs but companies which are involved in much of the same business, these public outcries have been damaging to the reputation of the company.

Although Goldman Sachs is under investigation by the SEC a recent poll was done and the majority felt that Goldman Sachs and not done anything thought to be consider criminally wrong many people polled felt that it was just a business deal gone, but thirty six percent felt that what was done was morally and ethically wrong a bad for business. The economy had continued to be hit with major financial scandals Goldman Sachs will just become a part of history as time passes and the economy rebounds Goldman Sachs and companies just like them will continue to do business in unethical manners and make attempts to get away with it.

With the government stepping into business more often to examine there everyday operation we can only hope that these scandals will merely be a thing of the past. The corporate culture at Goldman Sachs has been described as almost cult like due to the close knit relationship of its employees. Fitting in is important to its employees, and in recruiting prospective staff they aim to find people who are willing to do things the Goldman Sachs way. There is something terribly wrong about a country like ours where you make billions of dollars by making nothing and producing nothing but taking advantage of an economic situation, Sen. Christopher Dodd, D-Conn. When ethics fail in the commercial markets, more and more stringent regulations are certain to follow. It’s the only way to assure the integrity of financial and commercial transactions. www. thecorporateeye. com “The organization culture at GS was driven by its 14 business principles. Of these, putting clients’ interests topped the list.

In the 1980s, GS adopted the practice of refusing to represent any company involved in a hostile takeover bid. GS believed that the company being targeted might have been its client in the past or had the potential to be one in the future. This was the result of the legacy left by Goldman who stressed hard work and the importance of absolute integrity. Walter Sachs, nephew of Goldman, remarking on the ways in which Goldman conducted his business, said, “It was a small business done in a small way – but with accuracy and exactitude. ” www. icmrindia. org

In the financial crisis many companies are victims to this problem but there are also many companies who reap the rewards of these disasters, when government step in to bail out these companies to aid in correcting the problem you have to second guess is it correcting or contributing to creating more problems in the long run. The ethical standards by which these companies claim to stand behind seems to be far from what they have printed in their handbooks as we the public continues to see these problems repeat themselves in various financial institutions along with other large corporations.

Corrective actions should be the enforcement of anti-trust laws that already exists creating a non partisan team of outsiders to create a diverse and new regulatory environment for the future. The President will need to make a push for stronger regulations within the financial industry. If large financial institutions no that there will be severe penalties not only financial but criminal as well there may be limitations to the extent of what they will do to make a profit. “The key legal question is whether this was a “material” fact that Goldman Sachs was obligated to tell IKB and other prospective investors.

There are of course broader questions in play: the wisdom of “derivative” financial instruments that are side bets rather than actual investments; the failure to regulate such instruments aggressively in the past and the question of how they should be regulated now; the extent to which investment banks in general and Goldman Sachs in particular can be blamed for the financial meltdown of 2008-2009; the culture of investment banks like Goldman Sachs and why that culture led first to their lionization and then to their demonization”. ww. psandman. com Prompt corrective action making financial institutions subjected to strict supervision and authority, enhancement in risk monitoring and risk management and more systematic prudential oversight of these activities. References Apple: t. o. (n. d. ). BusinessWeek – Business News, Stock Market & Financial Advice. BusinessWeek – Business News, Stock Market & Financial Advice. Retrieved http://www. businessweek. com CNN. com – Breaking News, U. S. , World, Weather, Entertainment & Video News. (n. . ). CNN. com – Breaking News, U. S. , World, Weather, Entertainment & Video News. http://www. cnn. com Goldman Sachs. (n. d. ). Goldman Sachs. http://www. goldmansachs. com SANGER, D. E. (n. d. ). The New York Times – Breaking News, World News & Multimedia. The New York Times – Breaking News, World News & Multimedia. http://newyorktimes. com Sandman, P. M. (n. d. ). Peter Sandman website: Home page. Peter Sandman website: http://www. psandman. com secgov. com. (n. d. ). secgov. com. http://www. secgov. com

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Business Analysis of Goldman Sachs. (2018, Jun 03). Retrieved from

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