Taking a closer look at the charges against Goldman Sachs
FiveThirtyEight: Politics Done Right: On Goldman
538 does what they do best: nerd out about important and complicated political matters. In this case, Hale Stewart explains why Goldman was charged he way it was, and how things look pretty good for the SEC in this case.
First, it appears as though the government has done a great deal of investigation regarding this matter. The complaint presents a specific time line of events which the government has copiously documented. There are references to emails and sales literature throughout the complaint. I don't know under what authority the investigation was constructed, but it was very thorough. That tells us the SEC has done everything they can to line up their ducks, placing Goldman on the defensive.
Second, in government based litigation, the government is going to argue more or less the same thing in a line of cases. Therefore, they usually bring their best case first to set a precedent for other jurisdictions to follow (this is what the IRS does in anti-avoidance litigation). I'm guessing this is the government's best case in this area. In correlation, the SEC is desperately trying to re-establish itself as a potent enforcement arm. I don't think they would bring a case right now unless they thought they had as close to a slam dunk case as possible.
Third, the government has brought allegations against Goldman and Fabrice Tourre, a Goldman employee who more or less was the primary mover behind the transaction in question. My guess is the SEC is going after Tourre directly to get him to flip on Goldman. The reason is two fold. First, this is probably not the only Goldman transaction to warrant a complaint, so the SEC wants more information from within Goldman. Secondly, the SEC is currently looking at other deals and having an inside person on one deal could shed light onto how other deals were put together. I have no basis in fact for thinking that, it's just he's the only person specifically mentioned in the complaint and he was intimately involved in the transaction.
Fourth, this is a civil rather than criminal case. This goes to the burden of proof. In a criminal case, the government must prove the facts beyond the shadow of a doubt. In a civil case, the government must prove the facts by a preponderance of the evidence -- a much lower burden. Basically the government has gone forum shopping -- as is a petitioner's right in any case -- and found the best forum for their case.
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[Much more at the link]
