It has been revealed that Goldman Sachs sold almost half of its holdings in British Petroleum stock three weeks before the Gulf oil spill. While it is not unheard of for a major investment bank such as Goldman Sachs to sell a large chunk of stock, one can’t help but put the sale within a larger context. Did Goldman Sachs know of an impending safety issue with BP’s rigs?
It is certainly a possibility considering that Goldman Sachs was already caught shorting the Gulf of Mexico in April.
The new revelations came to light after government investigators turned up new emails from Goldman employee Fabrice “Fabulous Fab” Tourre in which he bragged to a girlfriend that the firm was taking a “big short” position on the Gulf.
“One oil rig goes down and we’re going to be rolling in dough,” Mr. Tourre wrote in one email. “Suck it, fishies and birdies!”
The timely sale saved Goldman Sachs the $96 million in losses Goldman would have incurred had the investment bank held its stock until after the Gulf oil spill.
The brokerage firm that’s faced the most scrutiny from regulators in the past year over the shorting of mortgage related securities seems to have had good timing when it came to something else: the stock of British oil giant BP.According to regulatory filings, RawStory.com has found that Goldman Sachs sold 4,680,822 shares of BP in the first quarter of 2010. Goldman’s sales were the largest of any firm during that time. Goldman would have pocketed slightly more than $266 million if their holdings were sold at the average price of BP’s stock during the quarter.
If Goldman had sold these shares today, their investment would have lost 36 percent its value, or $96 million. The share sales represented 44 percent of Goldman’s holdings — meaning that Goldman’s remaining holdings have still lost tens of millions in value.
The sale and its size itself isn’t unusual for a large asset management firm. Wall Street brokerages routinely buy and sell huge blocks of shares for themselves and their clients. In light of a recent SEC lawsuit arguing that Goldman kept information about a product they sold from their clients, however, the stock sale may raise fresh concern among Goldman’s critics. Goldman is also a frequent target of liberals and journalists, including Rolling Stone’s Matt Taibbi, who famously dubbed the firm a “vampire squid.”
