Even if there was material non-disclosure outside industry norms tantamount to guilt in a civil case, the whole thing seems trivial unless part of a much vaster scam. Client (Paulson) asks GS to create a product to short the housing market, client proposes elements for the product, more than half those elements not selected by industry expert (Abacus) to compose the product, Abacus itself goes a billion long the product alongside other deep-pocket sophisticates including GS itself which loses $90m on it, then after the trade goes bad Abacus et al complain to the SEC that Goldman committed fraud by not naming Paulson as a short seller. Bollocks on stilts.
From what I've seen so far this is a purely political case which is wilfully financially illiterate. Matt Taibbi, a left-wing journalist on Rolling Stone, famously wrote:
The world’s most powerful investment bank is a great vampire squid wrapped around the face of humanity, relentlessly jamming its blood funnel into anything that smells like moneybut even he thinks this is about politics.
You know, this strikes me as a dumb move even by Obama's standards. The whole liberal project has flourished from the support of Wall Street Jews, many from Goldman Sachs, and Hollywood Jews. I know it's always tempting for demagogues to throw the Jew down the well (Borat reference, but the clip is boring) and Obama's doing his damnedest to throw Israel down the well and I know that the true religion of many American Jews is liberalism, but even they, even the liberal Jews in Hollywood, Wall Street, New Jersey and New York, must start to get what really animates Obama (and Obama's supporters and mentors like Wright and Farrakhan and Sharpton). Obama is trying to play America as tho America were an ignorant crowd of victim culture voters in Chicago. I'm not sure who Obama's friends will be once he's alienated the Jews, the Press, Middle America, Democrats in Congress, the Supreme Court. Blacks don't count since they vote monolithically for Obama already. Hispanics? I don't think so. They're not monolithic in politics and most have conservative family values.
Goldman can win this one and the rest of capitalism, Jewish, Hispanic, black or blue, should line up with them. Also significant will be Obama's increasing isolation. Hey, New York, how do you like who you voted for? He wants to screw your biggest industry, he wants to screw your tax base, he wants to try KSM in Downtown Manhattan for a couple of years. Happy?