Goldman Sachs (GS) shares are tanking and the broader stock market’s falling as the SEC announces fraud charges against the investment banking and securities firm. But the selloff could be an overreaction as the fallout from this case may actually be limited when its all said and done.
That’s the reaction filtering through the blogosphere immediately after the charges hit the wire. Business Insider blogger Henry Blodget says there aren’t any “screaming smoking guns” in the complaint. Goldman will probably have to defend itself from civil lawsuits that will ultimately dismissed or settled. “This will cost Goldman some money, but not enough to matter to investors,” he predicts.
Michael Roston’s preaching the same tune on his True Slant blog, playing off the infamous “vampire squid” reference coined by Matt Taibbi last year.
If Goldman Sachs is only going to lose the $15 million it earned from Paulson & Co., along with the interest and penalties, this SEC action will amount to catching the edge of a single tentacle on a squid that swims away to safely feed in vast quantities again.
To its credit, Goldman issued a statement responding to the complaint.
“The SEC’s charges are completely unfounded in law and fact and we will vigorously contest them and defend the firm and its reputation,” Goldman says.