Dick Bove,a leading banking analyst at Rochdale Securities,says he would buy Goldman Sachs stock despite the firm's being charged with civil fraud by the Securities and Exchange Commission.The charges will have a short term negative impact,Mr.Bove said,but Goldman will still be Goldman.I don't want to defend them;if they have done anything inappropriate,they should be penalized,the analyst stated.
Dick Bove described Friday's plunge in Goldman's share price as a massive overreaction.Goldman's capabilities in trading and good systems suggest no one can take its place.The reputation of people within the division is strong enough that the business is gonna continue to thrive.Still,Mr.Bove observed,the shadow the charges cast is pretty sizable.He asked whether the SEC action is the first of multiple attacks on Wall Street firms.
The most likely outcome of the matter is an out of court settlement,in which Goldman will pay a few billion dollars to the government.It has already repaid the government loans received at the height of the financial crisis.Goldman reportedly has some 65 billion dollars in equity with which to pay the fine.Questions have been raised,however,about the tenure of CEO Lloyd Blankfein.There is also the possibility that the Justice Department will file criminal charges in the case.
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