Goldman Sachs Is My Bookie
Forget the lawsuits — the sharkskin suits at Goldman Sachs appear to have violated New York gambling law by acting as bookmakers, a Class “E” Felony punishable by up to four years in jail.
In New York, person who lost an asset to an illegal bet is entitled to get it back. So if Goldman Derivatives were illegal bets, everyone who’s investment lost value to a derivative scheme is eligible to recover it.
Here’s the legal breakdown (and while this stuff is dry, the payoff is worth it…)
- Defines “Gambling” as when someone “stakes or risks something of value” on a contest or future event they don’t control.
- Defines "Bookmaking” as “unlawfully accepting bets from members of the public as a business” not just between friends “upon the outcomes of future contingent events.”
- States that, “Bookmaking” is “Promoting Gambling in the First Degree” a “class E felony” punishable by a jail term of up to four years.
And here’s the big kicker – while money bet by the loser may only be recovered within three months under New York law – property doesn’t have this same limitation. So if an investment (a non-cash asset) was lost to a derivative bet, the investor is entitled to sue the winner (for the winner’s cut) and the bookie (for the bookie’s cut.)
Many people have pooled investments that rely on hedging (gain-loss averaging) to ensure a certain profit. Late last month, according to Investment News, the Securities and Exchange Commission announced they were investigating use of derivatives by mutual funds, traded funds and other instruments. If your mutual fund or retirement plan used a Goldman (or Goldman-like) derivative gambling scheme that originated in New York – and you lost value because of it – it appears that you are entitled to get it back. Courts may decide that It was an ill-gotten gambling gain.
If New York courts find that Goldman Sachs was really an illegal bookmaker, it might be time to throw that investment toward prison construction. In any event, call your broker.