‘We do not view this as a “life threatening issue”, but clearly it seems like a “black eye” for Goldman’, remarks US Banks analyst Keith Horowitz, ‘of the SEC’s civil lawsuit… for a start, this action is a civil complaint, not a criminal complaint, implying that downside is a large monetary fine… the 2 key issues for Goldman though, is reputational risk, and possible follow on lawsuits related to this action… also, the SEC’s complaint refers to only one CDO structure, and the issue is whether this was an isolated incident or not… issues that will take a while to resolve and will add more headline risk to the story – which thus makes it hard to call this selloff a “buying opportunity”… that being said, we would be buyers rather than sellers at these levels - on a fundamental basis, we continue to see very strong upside in the stock… so while we are raising our risk rating to “High” from “Medium”, we are keeping a ‘Buy’ on Goldman Sachs’.
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