Mention one or more consequences of the Goldman SachsAbacus

Mention one or more consequences of the Goldman Sachs/Abacus 2007 scandal

(a) Goldman Sachs decided to devote more resources to asset management, and less to risky bond trading.

(b) Goldman Sachs decided to devote more resources to train employees in ethics-related issues about conflicts of interest.

(c) Short sellers are required to disclose their positions to the Securities and Exchanges Commission (the US Federal government).

(d) Under the Barack Obama Administration, the Securities and Exchanges Commission sought to apply the same fiduciary duties to asset managers and broker-dealers.

Solution

Post the ABACUS scandal, Goldman settled by paying a sum of half a billion dollars and also accepted that the marketing materials did not disclose the complete information to the investors. As part of the settlement, Goldman also committed to a additional education and training to be given to the employees in the segment of business related to derivatives. It also acknowledged that it is undertaking a firm wide comprehensive review of the standards that governs its business. Thus the appropriate outcome of the scandal was Goldman Sachs decided to devote more resources to train employees in ethics-related issues about conflicts of interest