Simon Johnson: Paulson Should Be Banned from Securities Business

Tuesday, 04 May 2010 02:13 PM

By Dan Weil

Share:
  Comment  |
   Contact Us  |
  Print  
|  A   A  
  Copy Shortlink
Hedge fund legend John Paulson, who helped design the security that led to the government charges against Goldman Sachs, should be banned from the securities industry, says MIT economist Simon Johnson.

“Here’s the legal theory to keep in mind,” Johnson says.

“Mr. Paulson only stood to gain on a massive scale — or at all — if the securities in question were mispriced, i.e., because their true nature — that they had been picked by Mr. Paulson — was not disclosed,” he recently wrote on Business Insider.

In other words, the Paulson transactions only made sense if they involved fraud, Johnson says.

“If he was in any legal sense the mastermind — obviously he was, but can you prove it beyond a reasonable doubt? — then we are looking at potential conspiracy to commit fraud.”

And how should the hedge fund star be punished?

“Mr. Paulson should be banned from securities markets for life,” Johnson wrote.

“If that is not possible under current rules and regulations, those should be changed so they can apply. If that change requires an act of Congress, so be it," he wrote. "There is fraud at the heart of Wall Street. It is time to end that.”

Financial author Michael Lewis was a bit less harsh.

"What Paulson's doing is exploiting the idiocy of the system," he told The Washington Post.

"He used the securities-building process to build him something likely to fail."

© 2014 Moneynews. All rights reserved.

Share:
  Comment  |
   Contact Us  |
  Print  
  Copy Shortlink
Around the Web
Join the Newsmax Community
Please review Community Guidelines before posting a comment.
>> Register to share your comments with the community.
>> Login if you are already a member.
blog comments powered by Disqus
 
Email:
Retype Email:
Country
Zip Code:
Privacy: We never share your email.
 
Hot Topics
Follow Newsmax
Like us
on Facebook
Follow us
on Twitter
Add us
on Google Plus
Around the Web
You May Also Like

Tennessee Teen Says 'Bless You' Resulted in Suspension

Thursday, 21 Aug 2014 11:52 AM

Kendra Turner was following her parents' guidance when she said "bless you" after classmate sneezed, but says the courte . . .

Rush Limbaugh: Ditka May Be Fired Over Redskins Remarks

Thursday, 21 Aug 2014 11:35 AM

Conservative commentator Rush Limbaugh has expressed concerns that legendary football coach Mike Ditka will be fired by  . . .

Town Hall Shout-Down: Sen. Bernie Sanders Yells 'Shut Up!'

Thursday, 21 Aug 2014 11:30 AM

A town-hall discussion over the Israel-Palestine conflict gave way to incivility for U.S. Sen. Bernie Sanders, who got c . . .

Most Commented

Newsmax, Moneynews, and Independent. American. are registered trademarks of Newsmax Media, Inc. Newsmax TV, NewsmaxWorld, NewsmaxHealth, are trademarks of Newsmax Media, Inc.

 
NEWSMAX.COM
America's News Page
©  Newsmax Media, Inc.
All Rights Reserved