Lawsuits shine light on Goldman’s role in Asiasons, Blumont and LionGold crash

[valueinvestor]

So far we only hear one side of the story.

[NTL]

So far we only hear one side of the story.

Ya, so the case must be a special situation for the bank to demand payment and issue the notice of default in 7mins.

Just see if there will be more news.

[CityFarmer]

So far we only hear one side of the story.

Ya, so the case must be a special situation for the bank to demand payment and issue the notice of default in 7mins.

Just see if there will be more news.

What I read is dateline was given half-day in advance, and served notice of default 7 mins after the dateline.

It is likely due to GS internal risk management procedure was triggered. The front-line staffs were doing damage control then, rather than normal business procedure.

[level13]

Before this whole saga, anyone here knows that the insiders have pledged their shares to financial institutions in exchange for loans??


Following is an extract from MAS SFA(SECURITIES AND FUTURES ACT):

Financial institutions which are in the business of lending money, however, will not be required to report on their interests in voting shares which are pledged as collateral for loans until their customers default on their loans. This exemption is set out under section 4(10)(b) of the SFA which states that an interest can be disregarded if “the interest is that of a person whose ordinary business includes the lending of money if he holds the interest only by way of security for the purposes of a transaction entered into in the ordinary course of business in connection with the lending of money”.


I have always maintained my view that the authorities have to make the disclosure by insiders mandatory whenever they are using shares as collateral for their loans.

Unfortunately, the SFA above states that this disclosure is not necessary at this moment?

The action of using shares as collateral against loans from financial institutions is deemed to result in a change of ownership. These institutions can now have the authority to do whatever they want in the event there are problems with loan repayment. Since at the end of the day, there is an indirect change of ownership, why arent such disclosures mandatory??

[kichialo]

Do other more developed exchanges like HK or ASX etc have such disclosure rules?

[MrValue]

I thought Quah shd be thanking Goldman for selling her shares at a high price.
don't understand what's the lawsuit about

[opmi]

I thought Quah shd be thanking Goldman for selling her shares at a high price.
don't understand what's the lawsuit about

didn't not sell enough...

[specuvestor]

Firstly there is wisdom on why Buffett don't encourage leverage and why when we do fundamental analysis, it should be based on UNLEVERED ROIC. It is not pleasant to have the sword of damocles over one's head.

2ndly in the past when it was script based, broking houses knew when a stock is heavily punted and borrowed upon and they would act in concert. I am more amazed that GS is able to spot the trouble before it actually happened. GS sense of timing is uncanny, including during the GFC. If I'm SGX I'll be very keen to employ GS internal control people

3rdly I am amazed that nobody talked about GS during this saga... everything I heard was that Malaysia linked brokers were behind the ups and downs.

[NTL]

So far we only hear one side of the story.

Ya, so the case must be a special situation for the bank to demand payment and issue the notice of default in 7mins.

Just see if there will be more news.

What I read is dateline was given half-day in advance, and served notice of default 7 mins after the dateline.

It is likely due to GS internal risk management procedure was triggered. The front-line staffs were doing damage control then, rather than normal business procedure.

You are right. My mistake for reading too fast.

[Big Toe]

Banks do have a reputation to maintain. So there must be a reason why they did what they did.
No one would do business with a bank that recalls a loan form its customers ever so often.

My best guess is that GS saw a huge opportunity to short what is overvalued.
At the same time, should the prices of shares come down fast(inevitably) and borrower really defaults,
GS stand to lose out.

So the rational thing to do is to recall the loan and force the default, this way they got back the money
and at the same time lowered their risk and maybe stand to gain big time if they go short. Make sense?

Anyone who managed to short these counters before trading was halted/limited probably would have made the
most money within the shortest possible time. (that is why go short=short time, go long=long time)