Too Big To Prosecute: Goldman Skates Again

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These investment bankers almost ruin our economy and they're still acting like it's 2007. Have they no shame?

If you missed the latest news that former Goldman Sachs (NYSE: GS) Vice President Neil M. M. Morrison was fined a record $100,000 by the SEC and barred from the securities business for five years for breaking municipal securities rules, don't feel bad.

The news didn't make it into many newspapers.

And sadly, that's because there's nothing newsworthy about greed and corruption on Wall Street.

Here's what Morrison did wrong, besides getting caught. And what his former firm Goldman Sachs said about him after they threw him under the bus, then fired him because he got caught doing what he did.

It's kind of like the intro to "Mission Impossible" episodes and movies when the agent receives the assignment, and the message ends saying, "Of course, if you are caught, we will disavow having any knowledge of you or your mission," then self-destructs.

Neil Morrison, 38 years old, started as a vice president of Goldman Sachs in July 2008. As a municipal finance executive in Goldman's Boston office, Morrison's job was to bring in municipal underwriting business, including the Massachusetts Treasurer's office.

Goldman "trained" Morrison on the ins and outs of gathering municipal underwriting business, the rules, regulations and laws governing municipal financing and underwriting standards, as well as Goldman's own internal policies.

And then….

Killing the Interview, Goldman-style

Fortunately for Morrison, he had friends in high places. This is pure speculation on my part, albeit educated speculation, but Goldman likely knew, perhaps from the interviewing process for which Goldman is so famous, that Morrison was well-connected.

From November 2008 until October 2010 Morrison, by a stroke of good fortune, worked for then-Massachusetts Treasurer Timothy P. Cahill on his gubernatorial campaign.

Morrison's portfolio on behalf of the aspiring governor included fundraising, fundraising solicitation, writing position papers, speechwriting, prepping the candidate for press conferences, interviewing consultants and rendering legal advice.

Morrison didn't get paid by Cahill, and he didn't contribute money to the candidate's campaign efforts.

But there's little doubt that Morrison and his employer expected his "in-kind" contributions to be remunerated by the then-treasurer and possibly future governor, by throwing a little municipal underwriting business his way.

It turns out that the 364-plus e-mails from Morrison's Goldman Sachs office computer and all his other campaign efforts for the treasurer, many of which were orchestrated from the Goldman office, were to no avail.

But that didn't mean Morrison's efforts were in vain. During the time Morrison was contributing his energies to Cahill's campaign, Cahill steered more than $9 billion of underwriting business to Goldman Sachs. The firm profited by some $7.5 million in fees.

Cost of Doing Business

Well, it turns out that there's a law against that kind of back scratching. It's called "pay-to-play" and it's illegal.

Morrison didn't think he was doing anything wrong, but Goldman was surprised, to say the least.

Once it was found out that Morrison and Goldman were being investigated, Goldman fired Morrison. Goldman said, "Neil Morrison violated applicable regulatory rules as well as Goldman Sachs' internal policies. We detected his activities, promptly alerted regulators, terminated his employment, and fully cooperated with investigations."

Of course, it never occurred to Goldman that Morrison was doing his job in a way that they expected him to and he simply got caught. Then, with their own hands soiled, Goldman promptly sought a settlement of the matter without admitting or denying guilt and paid a piddling $14.4 million fine.

As far as Morrison, he bore the brunt of the punishment, not by the "record" $100,000 fine (tip money for a Goldman banker), but by being barred from the securities milk run business for five years.

But then again, it was only ever a civil matter. These crimes are never criminal matters, when big money and big politics are involved.

Maybe the word criminal, as in one who commits a crime (things there are laws against), should be changed to "civilinal" so as to not offend hardworking white-collar criminals.

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About the Author

Shah Gilani is the Event Trading Specialist for Money Map Press. He provides specific trading recommendations in Capital Wave Forecast, where he predicts gigantic "waves" of money forming and shows you how to play them for the biggest gains. In Short-Side Fortunes, Shah shows the "little guy" how to make massive size gains – sometimes in a single day – by flipping large asset classes like stocks, bonds, commodities, ETFs and more. He also writes our most talked-about publication, Wall Street Insights & Indictments, where he reveals how Wall Street's high-stakes game is really played.

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  1. Curtis Bostic | June 6, 2013

    I'm glad you're exposing these people as the criminals they are!I'm waiting for all of them to be brought before the courts and tried for the scum they are and to sit in prison for a long time to think of their misdeeds!

    • DD | June 6, 2013

      Prison???? NO WAY, prison is too good for these people. Take ALL their assets right down to the last penny and throw them out on the street where they can beg for their next meal for the rest of their miserable lives. Why should our tax dollars pay for their 3 sq's a day, hot showers + TV?

      We MUST demand this be their punishment (living on the street in a cardboard box) as this will be much worse for them and better for us than any jail/prison time.

  2. Arnold Kirschner | June 6, 2013

    You are so right! Something really has to be done about these "To big to prosecute." companies. Because for the sake of personal gain by a handful of people, they will destroy our markets and do immense harm to our country. If that were to happen, what good is the money they illegally made? They do have to make a purp walk and go to jail!

    • DD | June 7, 2013

      Arnolds K — I REPEAT- NO WAY, prison is too good for these people. Take ALL their assets right down to the last penny and throw them out on the street where they can beg for their next meal for the rest of their miserable lives. Why should our tax dollars pay for their 3 sq's a day, hot showers + TV?

      Why people keep insisting they go to jail at our expense is absolutely beyond me!!

      A cardboard on some street corner would be better suited than a jail cell. I'm ok with throwing them my scraps of food from the car window.

  3. Bill | June 6, 2013

    Clarification needed.

    In your article you stated " The firm profited by some $7.5 million in fees" and a little later you stated "…………… and paid a piddling $14.4 million fine". The fine reported is greater than the profits, leaving me to think that perhaps the profit was actually greater than $7.5 million — possibly $75 million.

    • Helmut | June 6, 2013

      On $9 billion of bonds the underwriting fee of $7.5 mil would be 0.083%. If that's the case, I think Goldman won the business by being competitive. As for the "criminal" back scratching, that kind of customer service is recommended in most text books on selling.

    • Fred | June 8, 2013

      You seem to suffer from penny counter's delusion — big banks don't count millions, it's just "petty cash", and every loss, including fines, is a write off on their taxes.

  4. RD Erickson | June 6, 2013

    Sometimes the sanest reaction to an insane situation….is Insanity. We are in a revolting situation….but do know how to Revolt.

  5. Kevin | June 6, 2013

    You can't keep a good man down!
    So let's see where he prospers again
    Having made friends with those "in high places"
    we're sure when he plays, he'll show up with some "aces"
    A fine is just fine , when it comes to your past,
    But "political friends" are more helpful, it's true
    What you know about them, can really help you
    When you need some leverage, they all have their say
    You get the "appointment"– they see it your way.
    And business is business for old Goldman Sac(K)s
    We know , one and all, they still have our backs!

  6. werner fuerbacher | June 7, 2013

    while congress, the white house and their workers are allowed to trade on insider information without fear of prosecution, i really don't want to hear how bad wall street is.
    they are in a perfect position to take advantage of insider trading and screw the rest of the public and yet it is acceptable.
    they past a law to make insider trading illegal for them, but then in the darkness of night repealed it.

    at least the wall street people share their gains with pension plans and dividends. the criminals in washington get to keep it for themselves

  7. Jimmy Z | June 7, 2013

    And the Great Fleecing continues.

  8. DD | June 7, 2013

    Jimmy Z – I agree with you.

    Everyone should read The Creature from Jekyll Island by G. Edward Griffin.

  9. enthusceptic | June 8, 2013

    DD, DD, Bill, Helmut and werner, excellent points! When these people are on their way out of the courcourtroom they can get a cardboard box – one each – with "This is what those millions bought you" written on it.
    Somene junior – who's not "connected" and in on it – with cojones should then connect the big dogs and teachers of these practices to company policies so that they can get the same treatment.

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