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4 Comments

    • Ben Stein on Goldman's Hatzius: Chinese Walls and Wall Street [view article]
      I don't think you get my point.

      There is an inherent conflict of interest in selling stuff to a client which is also being shorted. The client is bound to become resentful and will forever wonder whether there was manipulation involved. At the end of the day, a bad business practice because that client will no longer trust you.

      There is always an element of trust involved in these transactions. Imagine that you are a client who takes the advice of your broker. You will be incredibly upset if you determine that he was taking a contrary position - and profiting mightily from it - at the same time.

      At the end of the day, the only thing we have is our credibility. Goldman's has taken a hit for the sake of short term profits. I don't think that blithely suggesting that "one part" of Goldman's was doing doing this is going to correct the suspicion that it was doing something improper.

      The fact that GS was in fact not wrong on its shorts says more about the acrid taste in the mouths of its clients than anything else. They were not wrong, and the speculation at the end of your message is therefore irrelevant as the perception will forever be that they were right because they knew something they did not disclose to their clients.
      Dec 03 02:57 PM
    • Ben Stein on Goldman's Hatzius: Chinese Walls and Wall Street [view article]
      I don't think you get my point.

      There is an inherent conflict of interest in selling stuff to a client which is also being shorted. The client is bound to become resentful and will forever wonder whether there was manipulation involved. At the end of the day, a bad business practice because that client will no longer trust you.

      There is always an element of trust involved in these transactions. Imagine that you are a client who takes the advice of your broker. You will be incredibly upset if you determine that he was taking a contrary position - and profiting mightily from it - at the same time.

      At the end of the day, the only thing we have is our credibility. Goldman's has taken a hit for the sake of short term profits. I don't think that blithely suggesting that "one part" of Goldman's was doing doing this is going to correct the suspicion that it was doing something improper.

      The fact that GS was in fact not wrong on its shorts says more about the acrid taste in the mouths of its clients than anything else. They were not wrong, and the speculation at the end of your message is therefore irrelevant as the perception will forever be that they were right because they knew something they did not disclose to their clients.
      Dec 03 02:57 PM
    • Ben Stein on Goldman's Hatzius: Chinese Walls and Wall Street [view article]
      You are missing the point.

      Take the Stein piece out of the equation. Make it disappear, if you will. Then ask yourwself how would you justify GS selling toxic mortgage based crud at the same time that it shorted it?

      Stein muddied the picture by discussing the Hartzius memo. The conflict of interest is the one I described.

      The proper disclosure in an honest financial world [I fully know tht I am engaging in fantasy here] would requitre GS to sell the crud only after disclosing at the time of the sale or (even later, when it does go short on it], that it has taken a position directly contrary to its clients' interests.

      You may well argue with me, but I believe that any party who got shafted by GS in this manner will remember and not ever do busines with it again. If I were an asset manager, I would definitely strike them off my list.

      The market will take care of them. You cannt screw your clients and expect them to come back for more of the same.       Dec 03 08:44 AM
    • Oilsands Quest Inc.: Undervalued Canadian Oilsands Play [view article]
      bob,

      I would normaly agree with you if BQI IMO had any intention of producing oil. In my estimation, it is looking to be bought out like North American Sands got bought or enter into a JV with a major. I don't think dilution should be a problem, or a big one, anyway.       Jul 17 08:48 AM
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