Nov 15 2008
Goldman Sachs conflict alleged in California bond sales
Goldman, Sachs & Co. urged some of its big clients to place investment bets against California bonds this year despite having collected millions of dollars in fees to help the state sell some of those same bonds. According to a report in the Los Angeles Times, the giant investment firm did not inform the office of California Treasurer Bill Lockyer that it was proposing a way for investment clients to profit from California’s deepening financial misery. In Sacramento, officials said they were concerned that Goldman’s strategy could raise the interest rate the state would have to pay to borrow money, thus harming taxpayers. While it is not clear whether this is technically illegal, it is what gamblers call, “playing both ends against the middle” and California has been highly sensitive to the possibility of any major corporation gaming the system ever since Enron ran off with the entire State treasury in 2001. The full article can be read at this link.