Richard Klapper

The Securities and Exchange Commission filed a civil suit against Goldman Sachs this morning. According to the SEC, Goldman is guilty of taking a “do what I say, not what I do” approach to mortgaged-backed securities.

Well, d’uh. That’s why Goldman isn’t suckling on the federal teat right now.

The SEC claims Goldman sold a financial instrument that they knew was going to fail, while at the same time taking short positions against that instrument.

Goldman denies the charges:

The SEC’s charges are completely unfounded in law and fact and we will vigorously contest them and defend the firm and its reputation.

Am Law Daily reports that Sullivan & Cromwell partner Richard Klapper will be representing Goldman in this matter.

Let’s unpack the SEC’s complaint (pdf). Whether or not the SEC prevails in this civil litigation, their complaint certainly succeeds in making Goldman look very shady — the company’s stock tanked this morning.

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H Rodgin Cohen 2 Chairman Aaron B Charney Aaron Brett Charney Sullivan Cromwell Above the Law Above the Law Above the Law ATL legal tabloid legal blog.JPGThis post picks up where our last one left off, in a page-by-page review of Sullivan & Cromwell’s Complaint (PDF) in S&C v. Charney. Our earlier thoughts are available here.
Now we’re up to the juiciest part: Paragraph 19. This paragraph concerns a certain confidential, internal firm document, which was leaked to the Wall Street Journal (previously discussed here).
S&C’s Complaint notes that a copy of this document (1) “is missing from [a] partner’s file”; (2) that the partner’s file “appears to have been put out of order”; and (3) that the partner in question had her office “next door to Charney’s office.”
You do the math.
Paragraph 19 also notes that the WSJ Law Blog, in writing about the leaked document, quotes from a handwritten note that was attached to the partner’s missing copy of the document. Charney also quoted from this same handwritten note, in Paragraph 63 of his Complaint. Ruh-Roh…
More after the jump.

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