Monday, April 19, 2010

"Goldman Sachs Vs. the SEC: What Fellow Wall Streeters Think" (GS)

From MarketBeat:

Over the weekend Wall Street analysts punched up their thoughts on the S.E.C.’s charges against Goldman Sachs. (For all you need to know on the deets of the charges check here.)

It’s no big surprise that many on Wall Street seem predisposed to side with the traders at Goldman in a head-butting match with the government. Still, their sympathy for the gold-plated investment bank isn’t stopping them from making tweaks to some of their calls for Goldman shares. Here are some takeaways we found thoughtful.

Bank of America Merrill Lynch: “The case states that GS received a $15 mm structuring fee and that Paulson earned, and investors lost, about $1 billion. The extent of GS’ direct financial exposure would thus seem to be about $1bn, or around $1 per share, assuming a judgment or (more likely in our view) settlement with the SEC were taxdeductible. However, the reputational damage could be considerably greater, unless it becomes clear that there are no other such cases against the firm and that no more individuals are charged.”

Oppenheimer: “We would view it as a positive for GS stock if other firms were charged as well. That would increase the likelihood that they all would be fined and that responsible individuals would be sanctioned … At the moment, it looks as if the SEC is pursuing an agenda aimed specifically at Goldman. That likely will keep a cloud over the stock for now. We are removing our $228 price target on GS.”

Citigroup: “This action is a civil complaint, not a criminal complaint, implying that downside is a large monetary fine. Based on our understanding, this implies the government did not find sufficient evidence to justify a criminal action, although that cannot be ruled out in the future. The Department of Justice, not the SEC, has the authority to bring criminal actions.”>>>MORE