Goldman’s Shares Plunge on Inquiries and Downgrades, © The New York Times, April 30, 2010, by Graham Boley, excerpt quoted verbatim:

How much trouble is Goldman Sachs really in?

One answer: About $21 billion worth.

That’s how much the vaunted Wall Street bank has lost in market value since it was engulfed in a fraud accusation two weeks ago.

Shares of Goldman tumbled anew on  Friday after reports surfaced that federal prosecutors had opened a criminal investigation of the firm, prompting two analysts to downgrade their ratings of the stock. The share price fell a precipitous 9.4 percent in an avalanche of selling, to close at $145.20, a nine-month low.That drop helped sink the broader market. The Dow Jones industrial average closed down 1.4 percent, ending lower for the week for the first time in about two months.

Goldman employees took a direct hit — as a group they are the second-biggest owner of the company, with 4 percent of its outstanding shares. Axa, the French insurer, owns slightly more.

The criminal investigation is in an early stage and may not lead to charges. The Securities and Exchange Commission, which brought the civil suit, is sharing information with prosecutors, according to a law enforcement official, but the focus of the criminal inquiry is unknown.

The criminal inquiry has been under way since early this year, the official said, before the S.E.C. filed its action on April 16 but months after Goldman learned of the civil investigation.

Wall Street analysts are beginning to acknowledge the potential liabilities Goldman is facing from the fraud accusations leveled by the Securities and Exchange Commission and federal prosecutors.

On Friday, two analysts, including Guy Moszkowski of Bank of America Merrill Lynch, cut their ratings of Goldman’s shares from buy to neutral, usually seen as equivalent to a hold, chiefly because of the financial risks associated with Goldman’s uncertain legal and political outlook.

Citing the federal investigation, Mr. Moszkowski wrote: “Most such probes end inconclusively, with no charges filed; and we continue to believe that GS has long-term earnings power beyond what is discounted in the share price. However, it is very difficult to see the shares making further progress until the matter has been resolved.”

Worries about Goldman’s future may receive a further airing this weekend when the billionaire investor Warren E. Buffett holds an annual meeting for his company, Berkshire Hathaway, in Omaha, where he is expected to take questions from shareholders. Berkshire is one of the biggest holders of Goldman shares.

Analysts and investors are beginning to worry about the potential damage to Goldman’s gilt-edged reputation, which could hurt its franchise if clients turn elsewhere. There is also the potentially hefty cost of fighting or settling the S.E.C.’s civil fraud suit.

Read the full article, here.

See, Goldman Loses Room to Maneuver After Public Testimony, Bloomberg, April 30, 2010, by Joshua Gallu, excerpt quoted verbatim:

Goldman Sachs Group Inc. may have backed itself into a corner by speaking out quickly to counter fraud claims by the U.S. Securities and Exchange Commission.

In the two weeks since the SEC filed its lawsuit, Goldman Sachs has released multiple written defenses, sent executives to Capitol Hill for sworn testimony and put Chief Executive Officer Lloyd Blankfein on television to explain the firm’s conduct as the housing market soured. While broadcasting its story, the New York investment bank also has given regulators, lawmakers and law enforcement agencies material to scour for contradictions that could weaken its defense.

SEC attorneys are already poring through the April 27 Senate testimony of Fabrice Tourre, the 31-year-old banker at the center of the lawsuit, looking for any deviation from sworn statements he made during the agency’s investigation, according to a person familiar with the probe who declined to be identified because the matter isn’t public.

“Going under oath and committing yourself before you have any idea what kind of a case might be brought against you — and more particularly what the evidence in that case might be — is going to seriously curtail a defense lawyer’s ability to find running room to defend you,” said Samuel Buell, a former federal prosecutor who is now a law professor at Washington University in St. Louis.

See, 10 Ways to Force the Stinking Rich to Share Their Wealth, AlterNet, April 15, 2010, by Zach Carter.

See, Barofsky: Geithner’s NY Fed In Possible Criminal AIG Coverup, Daily Kos, April 28, 2010, by bobswern, excerpt quoted verbatim:

A feature story on TARP Special Inspector General (SIGTARP) Neil Barofsky, running late tonight via Bloomberg, and also appearing on SFGate.com, indicates and/or infers that the SIGTARP’s office is now jumping ahead of the Securities and Exchange Commission (SEC) and, possibly, (even) the Department of Justice (DoJ), in its investigations into what may result in the filing of the first criminal charges against any entity or individual associated with the Wall Street bailouts.

Barofsky testified before the Senate Finance Committee on April 20th, where, according to tonight’s story, he said his office “…would investigate seven AIG-linked mortgage-related securities similar to Abacus 2007-AC1, the instrument underwritten by Goldman Sachs Group Inc. that is at the center of a U.S. Securities and Exchange Commission lawsuit filed against the investment bank on April 16.”

The primary difference in today’s coverage of the story, versus what we were told last week, appears to be focused upon a potentially more aggressive role for the SIGTARP’s office in the overall matter. As noted in tonight’s story, Barofsky’s office is now taking the lead in the investigation. Last week, as I noted in my diary on this story, all indications were that Barofsky’s office would be working with (and, possibly, referring matters to) the SEC and DoJ. Tonight, it sounds like the SIGTARP’s office is at the forefront of the enforcement efforts, instead.

Additionally, and perhaps most importantly, I believe this is the first time that even the remote possibility of charges (either criminal or civil) being brought against then-NYFRB President Tim Geithner are being mentioned (not by Barofsky, but by an MSM outlet such as Bloomberg), at all. However, it would not be a stretch to say that tonight’s story would certainly infer that our current Treasury Secretary’s role in the matter is being investigated. Of course, whether or not this will all lead to any conclusive result–other than a “report”–remains to be seen.

See, Six Word Story, Reader Supported News, May 1, 2010, by John Cory, excerpt quoted verbatim:

Givin’ it away: "For sale – By owner – American Dream."

Ritholtz Discusses SEC Fraud Case Against Goldman Sachs