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The People vs. Goldman Sachs

May 27, 2011

The outcome of the Goldman Sachs saga is interconnected to the investigations into Credit Sails.  If one of the largest investment banks in the world is penalized for betting against their clients, then certainly any other bank such as Calyon and their affiliates will be responsible.  Although this isn’t getting the attention it deserves in the United States, it is one to watch of the coming months.

Matt Taibbi, an investigative journalist may be responsible for launching a public attack against GS, through his recent Rolling Stone article, The People vs. Goldman Sachs (Click here for link to article).

Our analysis of this article and the previous article published in Business Day is available below:

We are pleased to report that the CDO debacle has made a resurgence in the United States and New Zealand news.  The initial reporting on Goldman Sachs nearly one year ago helped to instigate our initial investigation into Credit Sails and remains a critical topic for us and for you as a Credit Sails investor.

In an article published in Rolling Stone, The People vs. Goldman Sachs, Matt Taibbi an investigative journalist targets the gravity of Goldman’s involvement concerning bets against their customers leading up to and throughout the mortgage crisis of 2008 in the United States.  What marks a difference between this article and other past insinuations is that this one is backed up by a 650-page report recently released by the bi-partisan US Senate Subcommittee on Investigations, led by Democrat Carl Levin of Michigan.

Following the release of Matt Taibbi’s article earlier this week, some Wall Street analysts downgraded Goldman’s stock citing the article and mounting legal concerns as their rationale for the move.  Millions of dollars worth of value were wiped off Goldman’s books as the stock trade down nearly 5% within days.  The Subcommittee on Investigations is also pressing the SEC to investigate this case further.

As we approach approximately one year of our own inquiry into Credit Sails we must reflect upon the preliminary prosecutions brought upon Goldman Sachs.  For us it marked a turning point in global markets, as it was the first time a major investment bank was investigated concerning their involvement in CDO’s and market manipulation.  In our initial analysis, we found their synthetic CDO’s, chiefly Hudson and Timberwolf to be closely related to Credit Sails and decided to pursue the case on behalf of Credit Sails investors.  We encourage you to read the attached article as in our opinion it illustrates the power of global banks in market manipulation.

The other case from overseas recently covered in Business Day concerns Calyon and a New York finance firm known as Loreley.  Loreley has sued Calyon over fraudulently creating CDO’s and tricking them to invest long while also selling the short to another firm attempting to cover exposure to foreseeable losses.  We refer to this as a killing field as one firm designed a toxic product to clean up their balance sheet and another firm was sold the exact same AAA rated toxic junk.

The parallels between these cases will continue to present themselves, so rest assured, we will remain vigilant regarding any new information that could help retain value for your investment in Credit Sails.

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