1.Please write between two to three paragraphs (I will not grade grammar this time, just looking for content). Ethical issues.

The box on page 11 titled: FINANCE IN PRACTICE - Goldman Sachs Causes a Ruckus describes the controversial involvement of Goldman Sachs in a mortgage-backed securities deal in 2006. When this involvement was revealed, the market value of Goldman Sachs' common stock fell overnight by $10 billion. This was far more than any fine that might have been imposed, given the U.S. history of enforcement on similar issues.

A.Please note the footnotes which follow, which may assist you in responding to the following question: Is it the actual fine that caused the most damage to the firm, such as Goldman Sachs, in the 2006 Abacus Case, or the reaction of a drop in its stock price, which could have potentially hurt Goldman much more? What has taken place in other cases in which fines have been levied by various U.S. federal financial enforcement agencies, not just Goldman Sachs? What did Goldman do? What was Goldman Sachs defense? Would you consider their practices ethical, in this particular case?

The public often maintains the stance that financial regulatory and enforcement agencies as not levying a large enough fine. In fact, some fines, within the news, have been portrayed as just a a slap on the wrist. Goldman settled with authorities and was fined initially, according to multiple news sources and page 11 of the text, approximately $550 million dollars.

B.Please explain detailed specifics of the Goldman Sachs case, citing any specific part of the article. I would even suggest using outside resources to comment on the question. Be sure to see the footnotes to the page 11 article, listed below, as they may assist you in your interpretation and explanation of the aforementioned discussed points. Please write two to three paragraphs single spaced.

Footnotes to Page 11 Article:

These issues are discussed in the context of the Goldman deal in S. M. Davidson, A. D. Morrison, and W. J. Wilhelm, Jr., Computerization and the ABACUS: Reputation, Trust, and Fiduciary Responsibility in Investment Banking, January 2011, available at SSRN: http://ssrn.com/abstract=1747647. See also the presentation by Darrell Duffie at

www.darrellduffie.com/creditrisk.cfm or at:

https://web.archive.org/web/20110307175441/http://www.darrellduffie.com/

creditrisk.cfm.

In addition, see the New York Times article, at this URL:http://www.nytimes.com/2010/07/16/business/16goldman.html?_r=0