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Welch calls on SEC to recoup taxpayer funds from alleged Goldman Sachs fraud

first_imgUS Representative Peter Welch on Monday called on the Securities and Exchange Commission to expand its investigation into allegedly fraudulent securities sold by Goldman Sachs to determine whether the federal government can recoup bank rescue funds.In a letter to SEC Chairwoman Mary Schapiro, Welch joined Reps. Peter DeFazio (D-Ore.) and Elijah Cummings (D-Md.) in asking the SEC to determine whether taxpayer support received by the American International Group (AIG) was transferred to Goldman to cover fraudulent activities.On Friday the SEC filed a civil suit against Goldman alleging the firm misled investors by failing to disclose that one of 25 collateralized debt obligations (CDOs) sold by the firm was designed to fail. Seven similar CDOs were guaranteed by credit default swaps from AIG. Of the $180 billion AIG received in taxpayer assistance, $12.9 billion was transferred to Goldman to settle the bad credit default swaps.In the letter to the SEC, Welch and his colleagues seek to determine whether the investments covered by AIG – and, by extension, taxpayers – were also fraudulent.“The cynicism of Goldman Sachs using taxpayer funds to cover its own fraudulent activities would be breathtaking,” Welch said. “The SEC must turn over every stone to determine the extent of the fraud and recoup taxpayer money.”The letter is copied below:The Honorable Mary SchapiroChairwomanU.S. Securities and Exchange Commission100 F St. NEWashington, DC 20549Dear Chairwoman Schapiro:Thank you for your continued efforts to restore the role of the Securities and Exchange Commission (SEC), “to protect investors, maintain fair, orderly, and efficient markets, and facilitate capital formation.” The SEC announcement of civil securities fraud charges against Goldman Sachs and Fabrice Tourre is welcome news to both investors and the taxpayers who bailed out Wall Street.   The failure of the Bush administration to enforce these laws ultimately undermined the financial markets and contributed to the economic turmoil of the last three years.As you know, the SEC complaint makes disturbing allegations of fraud against Goldman Sachs. The SEC has alleged that Goldman Sachs enticed investors into long positions in a synthetic collateralized debt obligation (CDO), while unbeknownst to investors the CDO was specifically designed by hedge fund manager John Paulson to generate losses for short positions taken by Paulson and Goldman Sach’s proprietary accounts.  We are grateful that the SEC is seeking a court order for Goldman Sachs “to disgorge all illegal profits that they obtained as a result of their fraudulent misconduct.”  The U.S. taxpayer deserves nothing more.The complaint is based on a single CDO known as ABACUS 2007-AC1. However, the ABACUS 2007-AC1 offering was part of a series of 25 such CDOs, all arranged by Goldman Sachs. It is not beyond the realm of comprehension that the 24 remaining ABACUS transactions included similar materially misleading statements to investors in order to protect Goldman’s internal proprietary bets, or other coveted counterparties like Mr. Paulson.Seven of the ABACUS CDOs were guaranteed by credit default swaps from the American International Group (AIG).  These seven AIG-insured CDOs contributed to billions of dollars in losses at AIG according to the New York Times.Should any of these transactions be found to include fraudulent conduct, any resulting contractual payments from AIG-issued credit default swaps could be viewed as ill-gotten gains. In light of the U.S. Treasury and Federal Reserve Bank of New York’s extensive and unprecedented support of the insurance giant and the $12.9 billion in taxpayer dollars that AIG transferred to Goldman Sachs to settle the bad credit default swaps, it is imperative that the SEC pursue the recovery from Goldman Sachs of any fraudulently obtained AIG payments.Accordingly, we request that SEC, with all due haste, pursue investigations into the remaining 24 ABACUS transactions for securities fraud, evaluate the extent of any receipt, by Goldman Sachs, of fraudulently-generated AIG-issued credit default swap payments, and vigorously pursue the recovery of such payments on behalf of the U.S. taxpayer. Finally, should this or any subsequent investigation uncover criminal misconduct, we implore you to refer those matters to the Department of Justice for the appropriate prosecution.Again, we appreciate the enforcement efforts of the SEC, and look forward to monitoring the progression of this landmark case.Sincerely,          Peter DeFazio                    Elijah Cummings                 Peter WelchMember of Congress           Member of Congress           Member of Congress Source: Welch’s office. 4.19.2010# # #last_img read more

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NCAA denies USC’s appeal of penalties

first_imgFootball season might be months away, but USC is already eliminated from contention to play in any postseason bowl or the inaugural Pac-12 championship game after the NCAA’s Infractions Appeals Committee upheld all penalties against the Trojans.“I am very disappointed, but I am not surprised,” USC athletic director Pat Haden said.The penalties against USC include a two-year postseason bowl ban and the loss of 30 scholarships over three years. In the appeal, the Trojans requested that the penalties be reduced to a one-year postseason bowl ban, and the forfeiture of 15 scholarships over three years.Daily Trojan file photoThe Trojans will serve the second year of the two-year postseason bowl ban during the 2011 football season.“I feel badly for our seniors who had two years of [postseason bowl bans], even though they had nothing to do with what went on,” Haden said.Haden stated that USC would accept the penalties, and not sue the NCAA.“We have decided to move on and make the most of our situation,” Haden said. “We disagree with the findings, but I do think that the [NCAA’s Infractions Appeals Committee] itself is fair-minded.”Haden made it clear the university takes responsibility for the infractions committed by the football program.“We have to look at ourselves in the mirror here,” Haden said. “We could have, and should have, done things better. We had a player [former Heisman Trophy winner Reggie Bush] who knowingly did things wrong. We are not innocent here. We deserve some penalties, but it is the severity of the penalties that we think are unfair.”Haden expects that the 2004 BCS National Championship will be stripped, but that the Trojans will remain AP national champions for that year.Moving forward, Haden vowed to improve communication and relationship between the university and the NCAA.The Trojans held a brief team meeting Thursday morning, with USC coach Lane Kiffin telling his players to be smart with their social media reactions to the decision of the NCAA’s Infractions Appeals Committee.“We do not agree [with the findings], but we will deal with what we are dealt and move on,” junior quarterback Matt Barkley said.Barkley was confident that the team, which went 8-5 last season, would improve.“Ultimately, there have been a lot of changes that have been made from last year’s team to now in regards to the attitude that the majority of the guys have,” Barkley said. “I definitely think it will turn out better than it did last year.”last_img read more

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MLB trade rumors: Mets have spoken with Indians about Corey Kluber

first_img MLB trade rumors: Mets, Mariners deal for Robinson Cano, Edwin Diaz done pending physicals A two-time AL Cy Young winner, Kluber is coming off a 2018 season in which he pitched to a 2.89 ERA  in 215 innings. He will earn $17 million in 2019 and has team options in 2020 for $17.5 million and $18 million, New York Daily News notes. Sources say the Mets have spoken with the Indians about Corey Kluber. The two teams had talked about Yan Gomes before he was dealt to the Nationals, but the Mets’ interest now appears to also extend to Kluber, who had Mets manager Mickey Callaway as a pitching coach in Cleveland.— Mark Feinsand (@Feinsand) December 2, 2018The report comes after the Mets reportedly finalized a blockbuster trade with the Mariners for Robinson Cano and Edwin Diaz, a sign new GM Brodie Van Wagenen isn’t wasting any time in his new position at the helm of New York. Kluber, 32, has ties with the Mets through manager Mickey Callaway, who previously served as Indians pitching coach.   Related Newscenter_img The Mets don’t appear to be done making big moves this offseason as they are interested in making a trade with the Indians for pitcher Corey Kluber. According to MLB.com, New York has spoken to Cleveland about a potential deal. The report adds that the Mets previously had been in talks for Indians catcher Yan Gomes before he was dealt to the Nationals.last_img read more