Goldman Sachs has perfected the art of front-running and cheating the investing public.
Susanne Craig / Wall Street Journal:
Goldman's Trading Tips Reward Its Biggest Clients -- Goldman Sachs Group Inc. research analyst Marc Irizarry's published rating on mutual-fund manager Janus Capital Group Inc. was a lackluster "neutral" in early April 2008. But at an internal meeting that month, the analyst told dozens of Goldman's traders the stock was likely to head higher, company documents show.
The next day, research-department employees at Goldman called about 50 favored clients of the big securities firm with the same tip, including hedge-fund companies Citadel Investment Group and SAC Capital Advisors, the documents indicate. Readers of Mr. Irizarry's research didn't find out he was bullish until his written report was issued ...
Wall Street Pit:
Goldman’s Top Clients Given Access in Advance to Selective Information -- In any event, and stating the obvious here - these type of Wall Street practices are not a bit surprising. Allowing one set of clients to front-run another set of clients is unfortunately, the norm in Wall Street. What this story will do however, I think, is bring more unwanted attention to Goldman Sachs who continues to face unfavorable media stories.
Is Goldman's Selective Trading Disclosure A Legal Way For Preferred Clients To Front Run The Market? -- This pretty much summarizes the "magical" performance that many hedge funds generated in Wall Street's golden age: Goldman (and other firms, many of which however now are defunct) treated several clients preferentially, creating a "club" in any given name, running it up, then releasing what the club already knew to the broader investing public, as the club unloaded its positions to the witless majority. And this went on for many years, and in many aspects, still does.
Megan Barnett / Minyanville:
In Defense of Goldman's Research Practices -- Evidently the bank holds weekly meetings where its research analysts share trading ideas that are then passed on only to its biggest trading clients. The tips usually involve expectations for short-term swings in stocks they cover, and they sometimes differ from what the official ratings on the stocks reflect. The information is typically shared with about 50 "favored clients" of the bank, including Citadel Investment Group and SAC Capital Advisors. Smaller Goldman clients are unhappy with this...
Like it or not, this is simply another example of how the world works...
Deal Book: Goldman’s Analysts Take One for the Team
MarketWatch: Questions raised over Goldman research policy
Yves Smith / naked capitalism: Goldman Gives Preferred Clients Stock Trading Tips Early, Defends PracticeBarry Ritholtz / The Big Picture: Its Not Called “First Call” For Nothing . . .
Ashby Jones / Law Blog: For Goldman, Alleged Software Theft Gets Criminal TreatmentMelly Alazraki / DailyFinance: Stocks in the news: Procter & Gamble, Goldman Sachs, Nokia
Full Kaufman Letter To Mary Schapiro, Or Is The HFT Party About To End?