Goldman makes out nicely in settlement
The company will pay $550 million to sweep serious SEC charges under the rug.
Who came out the winner after Goldman Sachs (GS) settled charges with the Securities and Exchange Commission?
Let's see. In after-hours trading, Goldman shares jumped by 8%, and that was on top of a 4% increase Thursday as rumors of a settlement raced around the markets.
Investors continued to applaud Friday. Shares were up $3 and change, which means the company is worth $1.5 billion more than it was before the settlement. Not bad for a $550 million investment; no wonder they say Goldman always wins.
The SEC confirmed late Thursday that Goldman will pay $550 million and "reform its business practices" to make this ugly matter go away. The SEC crowed that the payment was the largest-ever penalty paid by a Wall Street firm.
You'll see no crowing by Goldman Sachs. At least, not in public.
The case centered around a portfolio of junk securities backed by truly toxic residential mortgages. This portfolio, called Abacus, was a real stinker, and intentionally so. The whole thing was created just so Goldman and its top clients could make a big bet against the housing market.
"Those deals initially protected Goldman from losses when the mortgage market disintegrated and later yielded profits for the bank," reports The New York Times.
Investors in Abacus weren't so lucky, collectively losing $1 billion. But hedge fund manager John Paulson, who picked some of the junk securities that went into Abacus, profited handsomely from the deal. Goldman didn't tell investors that Paulson was in on the whole thing.
(Paulson, by the way, just bought an amazing mansion in Aspen, with seven bedrooms and 8.5 baths on nine acres.)
Observers are clearly marking this settlement into the win category for Goldman.
"I’m just surprised that [the SEC] didn’t even get any management changes, or any kind of mea culpa," writes Felix Salmon. "The risk, of course, is that Goldman’s victory here will only serve to exacerbate its arrogance."
Business Insider calls the $550 million settlement "chump change," especially since Goldman won't have to admit to any wrongdoing.
Copyright © 2014 Microsoft. All rights reserved.
Fundamental company data and historical chart data provided by Morningstar Inc. Real-time index quotes and delayed quotes supplied by Morningstar Inc. Quotes delayed by up to 15 minutes, except where indicated otherwise. Fund summary, fund performance and dividend data provided by Morningstar Inc. Analyst recommendations provided by Zacks Investment Research. StockScouter data provided by Verus Analytics. IPO data provided by Hoover's Inc. Index membership data provided by Morningstar Inc.
The apparel chain takes a hard hit after blaming the weather for its quarterly sales decline. But cold temperatures don't explain the drop in full-year sales as well.
VIDEO ON MSN MONEY
Top Stocks provides analysis about the most noteworthy stocks in the market each day, combining some of the best content from around the MSN Money site and the rest of the Web.
Contributors include professional investors and journalists affiliated with MSN Money.
Follow us on Twitter @topstocksmsn.