Market guru Jim Cramer, founder of the Street.com, reckons Goldman Sachs will lose the case the federal government has filed against it for fraud.
“If there were a betting line on the trial of the Securities and Exchange Commission v. Goldman Sachs, the Securities and Exchange Commission (SEC) would be the overwhelming favorite,” writes Cramer in his column.
“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.”
Cramer believes the feds have captured the public’s imagination with this lawsuit.
“When you have the government vs. public enemy No. 1, who would you think gets the benefit of the doubt?” Cramer adds.
“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?”
But what of the merits of the case?
“They really don't matter. The SEC almost never loses a trial,” says Cramer. “Once the SEC has decided to bring a case, the only safe thing to do as a defendant is to cave.”
Nonetheless, Goldman is not caving in yet. It is playing defiant in public for now.
“What is clear is that Goldman was caught off guard by the fraud filing,” says Cramer.
Others share this view.
The New York Times is reporting that Goldman Sachs is saying that the losses on its accounts, being questioned by the SEC, are not evidence of bad faith, but are simply evidence of bad bets on an investment strategy.
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