FOR IMMEDIATE RELEASE
Wednesday, March 3, 2021
Contact: Pamela Russell at 202-618-6433 or prussell@bettermarkets.com
Better Markets Urges U.S. Supreme Court to Consider Goldman Sachs’ Monumental
Conflicts of Interest During the Financial Crisis as It Reviews Shareholder Lawsuit
Washington, D.C. – Stephen Hall, Legal Director and Securities Specialist for Better Markets, issued the following statement on the amicus brief filed in the Supreme Court today in support of shareholders seeking compensation for Goldman Sachs’ role in the financial crisis.
“One of the most appalling chain of events that unfolded in the lead up to the 2008 financial crisis involved Goldman Sachs’ fraudulent sale of mortgage-backed securities through the infamous “ABACUS” offering. Even as Goldman became convinced that the residential mortgage market was headed for collapse, it promoted designed-and-doomed-to-fail mortgage-backed securities to countless investors. At the same time, Goldman bet against those investments with its own funds, creating a powerful conflict of interest. Yet all the while, it reassured everyone in the public marketplace that it had extensive controls in place to address such conflicts and that the bank’s clients always would ‘come first.’
“Now before the Supreme Court is a group of Goldman shareholders, including pension funds, seeking to hold the bank accountable for its misrepresentations through a class action. The issue is whether the case can even be brought on a class basis. And to beat back the pension fund claims, Goldman is advancing the strained argument that its deceptive assurances to investors, which concealed profound conflicts of interest, didn’t have any impact on the bank’s stock price by artificially propping it up.
“In our amicus brief, we sought to help the Supreme Court appreciate the context in which Goldman’s misconduct occurred and why it was doubly important for Goldman’s shareholders to have truthful disclosures about the bank’s conflicts of interest and the way they were managed—or in this case mismanaged. As we explain in the brief, even before the ABACUS deal, the bank’s top executives knew full well that they were increasingly engaging in deals that presented stark conflicts of interest, and they also knew they had to do a better job of managing those conflicts. Yet any such good intentions were completely abandoned—along with honest disclosures—as the bank aggressively sought to profit from the downward-spiraling mortgage market in 2007, at the huge expense of investors and ultimately shareholders.
“In our brief, we also drive home the point that unless banks eliminate or neutralize their conflicts of interest with strong internal controls and accountability measures, and unless they fully and fairly disclose those conflicts, investors and shareholders alike will perpetually be victimized by banks seeking to maximize their profits no matter the fallout.”
###
Better Markets is a non-profit, non-partisan, and independent organization founded in the wake of the 2008 financial crisis to promote the public interest in the financial markets, support the financial reform of Wall Street and make our financial system work for all Americans again. Better Markets works with allies – including many in finance – to promote pro-market, pro-business and pro-growth policies that help build a stronger, safer financial system that protects and promotes Americans’ jobs, savings, retirements and more. To learn more, visit www.bettermarkets.com.
