Originally Posted By: DoubleWasp
Originally Posted By: Nebroch
Originally Posted By: Nebroch
Goldman Sachs just upgraded Tesla's stock to 'buy', capital raise is coming soon..
Well, that was quick. And GS is one of the underwriters, incredible.
Didn't there used to be some sort of laws about manipulating a stock one has an interest in?
It is illegal if Goldman Sachs coordinate the recommendation and underwrite the stock. But they didn't, the two independent groups didn't talk to each other about Tesla.
Goldman Sachs isn't that stupid, one day it recommends the stock and next day underwrite the stock.
Tesla doesn't need to pressure Goldman Sachs in writing positive about their company to give business to Goldman Sachs. If they get caught they will be in big trouble, it doesn't worth the possible gain in stock price.
The opinion below is from businessinsider.com, it is a little long.
Originally Posted By: businessinsider.com
On Wednesday, before the stock market opened in New York, Goldman Sachs analyst Patrick Archambault upgraded shares of Tesla.
Archambault put a "Buy" rating and a $250 a share price target on the stock because of what he sees as the market's failure to "fully [capture] the company's disruptive potential."
On Wednesday, after the market closed in New York, Tesla said it would sell $2 billion worth of stock, $1.4 billion of which would be issued by the company.
Tesla CEO Elon Musk would sell $600 million worth of stock to meet a tax obligation related to his buying even more Tesla stock.
Running the book for that new stock offering? Morgan Stanley and ... Goldman Sachs.
Now if you believe that banks — and specifically Goldman — are bad actors, this sort of deal makes sense. You might, in this scenario, say, "Well, of course: Goldman says nice things about Tesla and then Tesla does a nice thing for Goldman."
This would, however, be a breach of what the banks call a "
Chinese Wall," or a separation of various divisions that could come into conflict one another.
Originally Posted By: businessinsider.com
Research and investment banking are examples of divisions that could create a conflict of interest and between which there exists said wall — meaning that research analysts don't know who investment banks are doing deals with and investment banks don't know what analysts think of companies outside of published research.
In an email to Business Insider, Goldman Sachs said: "Our Research is independent. We followed all of our standard policies and procedures with respect to our research publication [on Wednesday]."
It seems unlikely that a coordinated breach happened here. That would be illegal and, while I'm not a criminal or a lawyer, it would seem that the point of breaking the law is not to get caught.
A big problem here is that Goldman can't save itself from itself.
Publishing a positive opinion on a company Goldman was about to do investment-banking business with — in order to secure more fees from said business — is a very public hill to die on.
It's a little too obvious. You will get caught. (The whole of Finance Twitter had this figured out in minutes.) And again, not a criminal, not a lawyer, but this seems very much in tension with the goals one seeks to achieve when they break the law. Namely: Get away with it.
For this to be such a flagrant and clear breach of the Chinese Wall inside Goldman you'd have to think the firm really is that stupid, or regulators are that inept, or you are that smart. Which you can certainly do. Go ahead. I don't. Call me naïve.
The question that interests me is why does everything have to look so bad?
Like, it doesn't take much to connect the dots here, spin the story that the markets are corrupt and we, the public, are all being taken for a ride by Wall Street.
But there's also seemingly no great way Goldman could've gotten around this issue. The firm can't have some sort of compliance middleman stop the publishing of Archambault's note without the Chinese Wall effectively coming down.
http://www.businessinsider.com/goldman-sachs-tesla-equity-offering-2016-5