The Securities and Exchange Commission last month accused investment bank and securities firm Goldman Sachs (NYSE:GS) of securities fraud because of an investment vehicle it created that allowed the firm and some of its clients to bet against and profit from the housing market crash. Goldman sold these same investments to its customers, who lost billions on them, and did not disclose that the person who had a hand in choosing the investments, hedge fund manager John A. Paulson, was also betting against them. While Goldman's guilt or innocence is not yet clear, these key numbers help tell at least part of the story.
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April 16, 2010: The day when the SEC filed a civil lawsuit against Goldman for securities fraud because of an investment it created, the Abacus 2007-AC1, to bet on the housing market's failure. The Abacus was a synthetic collateralized debt obligation that consisted of credit default swaps. (Find out more in Credit Default Swaps: An Introduction.)
April 30, 2010: The day federal prosecutors formally began a criminal investigation of Goldman.
25: The number of investment vehicles Goldman created to bet against (short) the housing market.
$10.9 billion: The total value of the Abacus investments.
$15 million: The fees earned by Goldman on its Abacus 2007-AC1 investment.
$840.1 million: How much the Royal Bank of Scotland, the hardest hit in the Abacus investment, lost on the deal.
$1.2 billion: Goldman's losses from investments in the residential housing market during the two years of the financial crisis, according to Blankfein's prepared remarks in his testimony to the U.S. Senate on April 27, 2010.
$3.46 billion: Goldman's earnings in the first quarter of 2010.
$68.7 million: What Goldman Sachs paid CEO and chairman Lloyd Blankfein in 2007 after a year of record revenue and earnings. This was the highest pay a CEO had ever received.
$236: The record-high price per share of Goldman stock reached in late October 2007.
$53: The record-low price per share of Goldman stock reached in November 2008.
$10 billion: The amount of bailout money Goldman Sachs received in late 2008.
June 2009: The month in which the company had repaid its bailout money in full, with interest, to the government. According to Blankfein, the interest represented "a 23% annualized return for taxpayers."
$160.70: The closing price of Goldman's stock the day the lawsuit was announced. The stock opened that day at $183.62. Its 52-week high as of May 6, 2010, was $193.60; its low was $128.06.
$5 billion: Amount of preferred stock Warren Buffett's company, Berkshire Hathaway, owns in Goldman. Buffett, despite his criticism of Wall Street, has been outspoken in his continuing support of Goldman.
35,000: Number of people who work at Goldman Sachs.
4%: Percentage of Goldman shares owned by the company's employees.
What's the Verdict?
Is Goldman Sachs guilty, or is it being picked on to justify tighter regulation of the financial sector? Or both? It's important to keep in mind that just because the numbers are large and just because Goldman is a financial firm that has managed to remain profitable during a financial crisis does not mean that the company is inherently greedy or crooked or that it should be presumed guilty. A company founded in 1869 wouldn't have lasted this long if dishonesty and corruption was its M.O. (Learn more in The Goldman Sachs Fraud Explained.)
As recently as March, Fortune ranked Goldman No. 8 in its list of 50 most admired companies; in February, Barron's ranked it No. 30 on its list of the world's most respected companies. Multiple sources, including the Sunday Times, BusinessWeek, Working Mother and Vault, have rated it as one of the top companies to work for.
It will likely be months or years before we have enough facts to know the truth of a story that's only just beginning to unfold. We'll have to continue to watch the numbers and see what they add up to for Goldman Sachs.
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