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Message to Wall St. in Goldman case: SEC 'back on the job' | McClatchy

WASHINGTON -- The Securities and Exchange Commission's civil fraud suit against Goldman Sachs that shook Wall Street stands in sharp contrast to the agency's many blunders in failing to stop the $50 billion Ponzi scheme of Bernard Madoff.

The complaint filed against Goldman Friday contained a meticulous narrative of a highly complex deal, but also included the crowing emails of a young Goldman executive who allegedly allowed a hedge fund client to stack the package with risky home mortgages. The hedge fund, Paulson & Co., secretly reaped a $1 billion profit by betting against the deal at the expense of other investors, the suit said.

Even the agency's news release announcing the Goldman suit was infused with "a condemnatory tone that we have not seen coming out of the SEC for almost a decade," since the end of the Clinton administration, said James Cox, a Duke University law professor who specializes in securities.

"The release is very judgmental about the conduct, almost scolding ... and those releases get done at the highest level," he said.

The message: The SEC is back on the job.

The fact is that what we're experiencing right now is a top-down disaster. -Paul Krugman
by dvx (dvx.clt št gmail dotcom) on Sun Apr 18th, 2010 at 11:45:05 AM EST
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