This commentary by Jim Cramer originally appeared Monday on RealMoney.com.
If there were a betting line on the trial of the Securities and Exchange Commission vs. Goldman Sachs, the SEC would be the overwhelming favorite. That's because unless Goldman gets a jury of its peers who live at 800 Fifth Avenue, the people who will debate the evidence most likely will side with the government. How could they not? When you have the government vs. public enemy No. 1, who would you think gets the benefit of the doubt? Who on Wall Street do you think is guilty until proven innocent these days, least of all the firm that President Obama and the SEC seem to love to hate? How about the merits of the case? First of all, they really don't matter. The SEC almost never loses a trial. Once the SEC has decided to bring a case, the only safe thing to do as a defendant is to cave. Give up the target, give up the target's supervisor -- that's the way of this business. Always has been. But Goldman committed to a different strategy, a highly unusual one of defiance. We do not know what happened between the time Goldman received its Wells Notice from the SEC indicating that the government was going to proceed with a formal fraud prosecution and the time when the SEC filed the fraud charges. But I understand that the two events were far apart and that the government pretty much sprang the fraud charges on Goldman. Did Goldman's lawyers, Sullivan & Cromwell, overplay the bank's hand? Did Goldman, fearing the potential ripples of a fraud charge -- pursuit by New York Attorney General Andrew Cuomo, losses that could mount if potentially defrauded clients went after Goldman for damages -- want to hammer out an agreement that cut exposure or minimized damage, but the SEC would hear none of it? It's not at all clear, but what is clear is that Goldman was caught off guard by the fraud filing. Loading Comments... 1 2 3 Last » Next ›SHARE:
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