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The SEC has the tricky job of showing that Goldman was reckless in deceiving investors about the hedge fund's role

No.

The SEC has the tricky job of showing that Goldman deliberately deceived investors about (i) the risk of CDO default; and possibly (ii) GS and Paulson & Co. conspiracy to assemble a crappy CDO for sale. The latter facts "go to" proving through SEC discovery process that GS "CDO managers" (S&P "CDO Manager Focus, pdf) possessed undisclosed, material information about asset performance that benefited GS and Paulson trading positions but harmed CDO buyers.

"If you were buying something, you should care about the fact that the person who was picking the things you were buying was actually betting against them"

No. If you have hired an broker, you should care to whom that agent's fiduciary duty is legally tied. It may not be you, actually, ignorant buyer. It may be the seller.

Huang is an assclown. He and Krugman should get a clown room where they can laugh and laugh and laugh about the "games" quants play all night long after chasing ambulances.

Diversity is the key to economic and political evolution.

by Cat on Mon Apr 19th, 2010 at 10:20:15 AM EST
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was reckless in deceiving investors

So GS's job was to deceive, but safely?

Goof catch, Cat.

The brainless should not be in banking -- Willem Buiter

by Migeru (migeru at eurotrib dot com) on Tue Apr 20th, 2010 at 01:38:00 AM EST
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