16 April 2010: The SEC charges Goldman Sachs with fraud
On April 16, 2010 the SEC accused Goldman Sachs of misleading investors in Abacus, a mortgage-linked deal whose underlying assets were partly picked by a hedge fund betting against it. Goldman shares fell about 13% that day. The bank settled three months later for $550 million, then a record for a Wall Street firm, without admitting or denying the charges. Its reputation took longer to recover than its share price.
The lesson: When the seller is also betting against the product, the buyer should ask why it is for sale.
What it meant for investors
$1,000 in Goldman Sachs at the start of 2010 → $4,235 today, vs $6,071 in the S&P 500.
We start the clock at the start of 2010, the year it happened. That is 4.2 times the money, but $1,836 less than a plain index fund made over the same years.
What Goldman Sachs teaches: Reputation and returns can diverge for years; an elite franchise can lose public trust and still compound, provided its core business keeps earning.
| Bought in | Price then | Worth today | S&P 500 would be |
|---|---|---|---|
| 2010 | $170 | $4,235 | $6,071 |
| 2012 | $92.00 | $7,826 | $5,312 |
| 2015 | $195 | $3,692 | $3,301 |
green = beat the S&P 500 · red = lost money
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