RBS Mulls Action as Goldman Tames SEC
Royal Bank of Scotland awarded a paltry $100 million in the $550 million settlement that SEC was forced to accept in the Goldman case is considering its options to sue Goldman for the full $841 million losses, that its acquisition the Dutch Bank ABN Amro had lost in the Abacus deal.
The Abacus deal that Goldman had structured for Paulson had two found two suckers. ABN Amro the Dutch Bank, an aggressive player in the housing mortgage CDO market had been sold the bigger chunk of the synthetic CDO’s worth $841 million while the German Bank IKB had bought CDO's of $150 million.
While IKB has been compensated the full amount of $150 million, the buyers of ABN Amro has been offered a measly $100 million as compensation.
Both ABN Amro as well as IKB has reserved the right to consider legal action against Goldman Sachs and may well go to win the same in an EU court. For the SEC settlement is faulty to the core when viewed from the angle of settlement to the aggrieved investors.
Though Goldman has avoided both stringent penalties as well as admission of guilt in its settlement with SEC, it has acknowledged that it had made a mistake in not informing the investors that the mortgages contained in the CDO package had been picked with the help and guidance of the hedge fund firm Paulson & Co. which had bet against the bond.
This itself is an admission of a financial omission that led to the two European Banks loosing a Billion dollars , the sum SEC had initially charged Goldman with but was later watered down to $550 million.
Both the judge who must approve the SEC settlement with Goldman or any EU court may call for full compensation to the victims including interests and associated administrative losses. This were huge particularly in the case of ABN Amro which collapsed under CDO losses after being one of the leading Banks of Europe over two decades, with operations in 63 nations.
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