Goldman Sachs Group Inc. research analyst Marc Irizarry's published rating on mutual-fund manager Janus Capital Group Inc. was a lackluster "neutral" in early April 2008. But at an internal meeting that month, the analyst told dozens of Goldman's traders the stock was likely to head higher, company documents show.
The next day, research-department employees at Goldman called about 50 favored clients of the big securities firm with the same tip, including hedge-fund companies Citadel Investment Group and SAC Capital Advisors, the documents indicate. Readers of Mr. Irizarry's research didn't find out he was bullish until his written report was issued six days later, after Janus shares had jumped 5.8%.
Every week, Goldman analysts offer stock tips at a gathering the firm calls a "trading huddle." But few of the thousands of clients who receive Goldman's written research reports ever hear about the recommendations.
- Write a report you know will move the markets once its publicly released.
- Sell the report to preferred clients.
- Delay releasing the report until your clients can purchase stock.
- Publicly release the report.
- Clients sell the stock, taking a cool-and-quick gain.
Pretty cool, isn't it? Most great crimes are fascinating.
What other crimes does Goldman Sachs commit each day? Perhaps we'll soon know.
The financial media only began exposing Goldman Sachs after blogs like Zero Hedge developed huge readership.
Scandal sells. And when it comes to Goldman Sachs, every day brings a new scandal.