Henry Blodget, famed analyst from the dot com bubble (which he helped created), thinks the SEC case against Goldman Sachs is weak. I beg to differ and suggested to him the following:
If Goldman knew of a material omission in the offering documents that they prepared and distributed to investors they are a primary violator of the securities laws and can be held liable under provisions of both the 34 Act and the 33 Act. Even if they could establish they had nothing to do with the actual preparation and distribution of the materials but only aided and abetted the fraud they could be subject to liability for a knowing violation of the law by the SEC though not by private lawsuits.
The material omission here is that they did not tell investors (or ACA) about Paulson’s actual role. Your argument hinges on the omission not being material because of ACA’s role. If your theory is correct then a crime was committed without a criminal since you argue it was all ACA’s fault. But it appears from their complaint that Paulson indeed influenced the final portfolio. In any case, ask any rational investor if they would have wanted Paulson’s role (in numerous meetings during the preparation and selection process) revealed prior to their investment decision. I cannot imagine anyone saying they would not care.
Of course, the SEC still has to back up its complaint in court in front of a judge and jury but assuming for the sake of argument the complaint is true then I think you are wrong in suggesting the case is weak. It actually looks quite straightforward and my guess is that the SEC was very careful in their selection of which transaction to go after and which targets to go after. The email trail for example is quite compelling and will likely be right up front in the opening statements on big boards for the jury to see.