Goldman Sachs Girds for Battle With the SEC

Contrary to rumors that Goldman Sacchs is in settlement talks with the SEC, CNBC's John Carney is reporting that Goldman is preparing to file a full-blown, point-by-point defense against the fraud allegations filed by the SEC, according to people familiar with the matter.

A sticking point for Goldman is the SEC’s fraud allegations. The company is unwilling to agree to any settlement that would have the appearance of affirming that Goldman committed fraud, a person familiar with the matter says. However, Goldman might be willing to settle a case alleging that Goldman was only negligent in omitting a material fact in marketing the deal, the person said.

The SEC wants to show that Goldman has been punished. It may be unwilling to cut a deal in which Goldman neither admits or denies wrongdoing, an attorney familiar with the thinking at the SEC said.

If this goes to trial, the proper thing to do is to cheer for a Goldman Sachs victory, for there was no fraud, but also to keep in mind the words of H.L. Mencken:

The trouble with fighting for human freedom is that one spends most of one's time defending scoundrels. For it is against scoundrels that oppressive laws are first aimed, and oppression must be stopped at the beginning if it is to be stopped at all.