Time to dust off the old juris doctor sheepskin, and wonder aloud about the legal advice that Goldman Sachs has gotten over the past few years. It's a question worth asking as I review the firm's recent history of unforced errors in the courtroom. The most recent case in point: the collapsing prosecution of former Goldman computer coder Sergey Aleynikov.
There's a pattern here, and we can discern its outlines by starting with the “Fabulous Fab” Tourre-Abacus case. This was a simple fraud case involving Securities and Exchange Commission rule 10B-5 governing "manipulative and deceptive practices." Any rookie lawyer could have looked at the facts concerning the sale of a monumentally complex security and recommended a quick settlement involving a modest fine. Instead, Goldman received what I can only surmise was some fairly awful advice, leading it to fight the allegations tooth and nail. I don’t know if it was a new legal team or simple exhaustion that led to an about-face, but Goldman settled in 2010 for a whopping $550 million fine and a lot of embarrassment.