Close

Goldman Sachs (GS) Is Confronted By Lehman (LEH) And Bear Stearns About False Rumors

July 16, 2008 4:14 PM EDT
Earlier today, the Wall Street Journal reported that Bear Stearns' Alan Schwartz asked Goldman Sachs' (NYSE: GS) CEO Lloyd Blankfein whether there was truth to the rumor that traders in Goldman's London office manipulated Bear Stearns struggling stock, days before the eventual fall.

Additionally, Lehman Brothers (NYSE: LEH) Richard Fuld, whose shares have dropped to historic lows, contacted Blankfein and said he was hearing "a lot of noise" were allegedly spreading negative rumors about Lehman. Obviously, spreading rumors known to be false with the intention of manipulating a stock is illegal.

Mr. Blankfein was upset by the inquiry from Alan Schwartz and said he had no knowledge of any manipulation of Lehman's stock, but Blankfein said he would respond harshly if any such behavior was revealed at Goldman. A Goldman spokesman said that Blankfein does not recall the conversation with Schwartz.

The SEC investigation into Bear's collapse involves documents that show that Goldman was one of the most-active parties in trading credit default swaps that it had bought from or sold to Goldman in the weeks before March 16th, when it reached an agreement to sell to J.P. Morgan (NYSE: JPM).

The documents also reveal that top hedge funds Citadel and Paulson & Co cut their exposure level to Bear Stearns in the week leading up to the eventual sale. Citadel said that the move was part of a long-planned restructuring of the various funds and Paulson & Co. said it was a move to cut its exposure to financial-services firms. John Paulson, who runs Paulson & Co, is a former Bear Stearns executive.
Sign up at EasyStockAlerts.com To Be Alerted To Your Stock News Today!

You May Also Be Interested In





Related Categories

Insiders' Blog, Rumors

Related Entities

JPMorgan, Goldman Sachs, Bear Stearns, Lehman Brothers, Paulson & Co. (PCI)