Goldman Gives Preferred Clients Stock Trading Tips Early, Defends Practice

Ooh, so there is gambling in Casablanca! I'm shocked, shocked!

An excellent bit of sleuthing comes at the Wall Street Journal, on how Goldman has for the last two years has had "trading huddles" that lead to ideas being presented to clients before analysts changed their grades on a stock. Proprietary traders also attend the meetings.

Now the funny bit about this is that this is an ongoing not so keen practice that Goldman that Goldman has pushed pretty far, in typical Goldman propensity to exploit any ambiguity in the regs.

One of the differences between big accounts and everyone else is access to the analyst. The idea that this article fails to highlight is that the written research report is much less meaningful than believed, except in the cases when an analyst does a big revision of earnings forecasts. Goldman seems to have played those changes to its key accounts, and maybe its own advantage.

But a second bit is that within a seemingly static rating, an account can get tremendous insight from talking to an analyst that a mere low level client who gets only the written product and participation in conference calls misses.

In other words, the two-tier system (or even three, since top accounts can get to analysts any time, but other institutional accounts will not get the same priority) has long been in effect. But Goldman appears to have pushed the boundaries yet again. Putting the prop traders with the top accounts onto hot trading ideas (by implication, everyone knows GS intends to pile in, hence it is safe for the big accounts to throw their weight int) smells like tan organized ramp of a stock.
From the Journal:

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.

At the meetings, Goldman analysts identify stocks they think are likely to rise or fall due to earnings announcements, the direction of the overall market or other short-term developments. Some of their recommendations differ from ratings printed in Goldman's widely circulated research reports. Some Goldman traders who make bets with the firm's own money attend the meetings.

Critics complain that Goldman's distribution of the trading ideas only to its own traders and key clients hurts other customers who aren't given the opportunity to trade on the information....

Continued>>.
http://www.nakedcapitalism.com/2009/08/goldman-gives-preferred-clients-stock.html

until I realized that the Repugniconvicts are getting this spun as "Obama's" bailout of Goldman Sachs & Friends ... despite being signed by Bush ...

I manage my own accounts. Why pay someone to steal your money? That is essentially what they are doing. After five years of letting an investment firm handle my accounts, I realized I was getting nothing for what I was paying. They are in it for themselves, not you. Oh, if you have millions of dollars invested, you may get a better deal, but if you are just an average investor, you are probably better off just buying T-bills. At least you don't have a bunch of vultures sitting around trying to figure out how they can steal more of your money!