I got a query earlier today as to whether I’d want to talk about the SEC’s lawsuit against Goldman Sachs. I averred that I’m always happy to play political pundit (the suit and the revelations it contains highlight the need for strong regulatory reform!) but that I don’t actually know anything about securities law or have any idea as to whether or not the SEC’s case has legal merit. For the record, the guy who writes the Economics of Contempt blog is a lawyer working in the relevant field and thinks the SEC’s case is weak and the only real issue is whether the PR cost of a long, nasty fight is higher than the cost of just settling.
Back with my pundit-hat on, I note simply that when it comes to fraud the real scandal is very often what’s legal. There are all kinds of nonsense non-financial scam products out there (I saw an add for this over the weekend) along with the various quick fix miracle cures and all the rest. A lot of this stuff, along with the tarot card readers and all the rest, is “fraud” in the ordinary-language sense but not necessarily the legal sense.