The FT's Francesco Guerrera reports on Goldman's defense against the SEC's fraud charge. It was all a matter of buyer beware, says the bank in submissions to the regulator. And there was nothing underhand.

In Goldman's view, it "defies credulity" that ACA, the independent manager of the CDO that also invested in the security, would have taken Paulson's suggestions on the loans if it had any concerns...

"There was nothing unusual or remarkable about the transaction or the portfolio of assets it referenced," Goldman writes. "There is no basis to suggest that the portfolio would have performed any differently or that the economic outcome for the participants would have changed in the least had Paulson's role and interest been more transparent."

Here are the documents in question.

Look out, Wall Street, the lawyers are coming, says Frank Partnoy in an excellent column. The implications of the case are far-reaching. Litigators can go where regulators fear to tread.

[T]he case demonstrates a more effective way to police bankers, because Wall Street cannot outrun a judge. That simple point has been part of Anglo-American common law jurisprudence for centuries. The US judge Oliver Wendell Holmes advised that the law was a prediction about what a judge would do. If bankers consider only whether they are complying with specific legal rules, they will create "alegal" transactions - deals that fit the letter of the law but violate its spirit. But they cannot be certain about how a judge might assess their conduct. That worry, not a rule, is what will make bankers tell clients about the presence of a fox.


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