Quote by samson63
The valuation was primarily done by Goldman Sachs (and UBS), who then made a huge profit when, surprise, surprise it turned out to be undervalued and the stock rose in value. Talk about putting the fox in charge of the chickens.
How did these banks make a huge profit from the stock rising in value?
From the increase in value and commission received when their "clients" (Goldman Sachs International) sold the stock.
Are you implying that Goldman Sachs bought stock in their own right? If so, at what value? would you also care to quantify the 'huge profit' made from the commission on the sale of stock?
Goldman Sachs International, a branch of the bank, had snapped up more than 21 million shares by October 31. On November 11, it had less than 17 million.
It means Goldman traders could have sold at least 4 million shares during a period when they peaked at 587p, at which point they were worth £27million
If they had bought at the issue price and sold at the peak, the deals could have made nearly £12million profit. Goldman Sachs were allowed to profit from their own advice. It has to be a conflict of interest and unethical.
Goldman Sachs claim that any shares subsequently bought were bought on behalf of clients. If you can prove otherwise I'd be interested in seeing your proof. Also, they could only have bought shares at issue price if any of the small investors sold at issue price, which is very unlikely, as they did not receive an allocation at flotation. Any profits realised would have been much smaller than the figures you put forward.
If the profits GS made were derived from commissions on purchases and sales of shares acquired and sold on behalf of clients, I fail to see how this is either a conflict of interest or unethical. They would have been doing nothing different to that which other investment banks were doing.
:rotflmao:
