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Elementary,Middle School,High School,College,University,PHD
| Teaching Since: | May 2017 |
| Last Sign in: | 408 Weeks Ago |
| Questions Answered: | 66690 |
| Tutorials Posted: | 66688 |
MCS,PHD
Argosy University/ Phoniex University/
Nov-2005 - Oct-2011
Professor
Phoniex University
Oct-2001 - Nov-2016
Disclosure under SEC Rule 10B-5. Dodona I, LLC, invested $4 million and 2 securities offerings from Goldman Sachs & Co. The investments were in collaterized debt obligations (CDOs). Their value depended on residential mortgage back securities (RMDs), whose value in turn depended on the performance of subprime residential mortgages. Before marketing the CDOs, Goldman had noticed several “red flags” relating to investments in the subprime market, in which it had invested heavily. To limit its risk, Goldman began betting against subprime mortgages, RMDs, and CDOs, including the CDOs it had sold to Dodona. In an internal email, one Goldman official commented that the company had managed to “make some lemonade from some big old lemons.” Nevertheless, Goldman’s marketing materials provided only boilerplate statements about the risks of investing in the securities. The CDOs were later downgraded to junk status, and Dodona suffered a major loss while Goldman profited. Assuming that Goldman did not affirmatively misrepresent any facts about the CDOs, can Dodona still recover under SEC rule 10b-5? If so, how?
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