Sanford Bernstein analyst Brad Hintz tells us "I see it as a $1.20 / share pay down in 2011 to 2013. That's if they lose everything; that's based on them having to disgorge their fees, that they get a $50 million fine, they pay $1 billion on the loss and they pick up the loss on the credit default swap."
But he adds that although Goldman's discretionary business may go elsewhere their M&A business will remain. "Goldman is the leader in the M&A and that business isn't going anywhere,".
Nuts & Bolts Info on Goldman Lawsuit
* Here’s what you must know about the civil charges facing Goldman Sachs as reported by our news partner Reuters
According to the SEC lawsuit two Wall Street giants are involved in these events – Goldman Sachs and Paulson & Co - the major hedge fund run by Wall Street Whale John Paulson that we talk about all the time on Fast Money.
Regulators say Paulson & Co. worked with Goldman in creating a collateralized debt obligation or CDO in which “Paulson heavily influenced the selection of the portfolio to suit its economic interests.”
In turn, Paulson took a short position against the CDO – therefore standing to benefit as its value fell - again that’s according to allegations.
What may be implied here is that the security was made up of particularly weak mortgages – deliberately.
Now, here’s the really bad part for Goldman.
According to the lawsuit, Goldman did not tell investors "vital information" about the security including the fact that Paulson & Co was involved in choosing which securities would be part of the portfolio.
Fabrice Tourre, a Goldman vice president who the SEC said was principally responsible for creating the product, was charged with fraud. Paulson has not been charged.
Goldman responded to the charges, saying they were "completely unfounded in law and fact."
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Trader disclosure: On April 16, 2010, the following stocks and commodities mentioned or intended to be mentioned on CNBC’s Fast Money were owned by the Fast Money traders; Finerman's Firm Is Short (IYR), (IJR), (MDY), (IWM); Finerman's Firm Is Long S&P Puts; Finerman Owns (AAPL); Finerman's Firm Owns (BAC), (BAC) Leaps; Finerman Owns (BAC), (BAC) Preferred; Finerman's Firm Owns (JPM); Finerman's Firm And Finerman Own (WFC) Preferred; Kelly Owns (FRE); Kelly Owns (FXE) Puts; Adami Owns (AGU), (BTU), (C), (GS), (INTC), (MSFT), (NUE); Terranova Owns (SWN), (XCO); Terranova Owns (FXY) May Calls; Terranova Owns (C) May Calls; Terranova Is Short (BRE); Terranova Is Long (SONC) May Calls; Seymour Owns (AAPL), (BAC), (EEM), (FXY), (GOOG)
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