The problem to be investigated is the gray areas. I feel that there were several gray areas in the Goldman Standard. One of which was how Goldman made money off of his customers. He would purchase 90% of the shares in a company and turn around and sell them for more than he purchased them. Goldman would use the profit off the shares that he sold and buy more shares from a different company and sell them again to make a profit. The “selling air” is another questionable part of this. This was in the 1990’s when Goldman became big once again on Wall Street by taking on the Internet companies and making them public. He underwrote 47 companies. It used to be a rule that no company could be taken public until they were able to show at least three years of profitability. Clients had to purchase a larger number of shares during a rollout at a higher price. There was “Laddering” going on throughout this whole thing. This is the scam where the underwriter would lock in clients at a predetermined rate where the stock was guaranteed to go up.
Goldman Sachs was always known as a powerhouse for investments and hedge funds, but it was also their downfall. Goldman handled business for several companies throughout the years, such as GE, Microsoft and even had overseas acquisitions. For example, eToys had them as the underwriter at about $20.00. After laddering the shares, the stock rose considerably which in turn led to the demise and bankruptcy of the company.
They were of course