Brace yourselves: Goldman Sachs may have committed securities fraud! Or so says Delaware’s own Sen. Ted Kaufman, in a floor speech today.

We know, the allegation that everyone’s favorite vampire squid may have been involved with certain activities that were not entirely on the up-and-up, for profits, is pretty farfetched. No one has been a better corporate citizen than $GS, and truly, it pains us to even whisper such things. But it is our solemn duty to report the news that we can make fun of, so here we are.

We’re not going to ask you to read through all of Sen. Kaufman’s musings – C-SPAN2 is only compelling television when your cable operator accidentally switches the feed to softcore porn, after all – and truth be told, we didn’t read the whole thing either. I mean come on. This is the stuff tl;dr is made of. Still, if you can make it past the yadda-yadda-yadda about Lehman (spoiler: it dies at the end) and some nonsense about the rule of law (spoiler: it was dead the whole time, just like in The Sixth Sense) (oops, actual spoiler there), you get to some sexy badmouthing of Goldman. And who doesn’t love that?

Goldman Sachs and other investment banks underwrote billions of Euros in bonds for Greece.  The questions being raised include whether some of these bond offering documents disclosed the true nature of these swaps to investors, and, if not, whether the failure to do so was material.

These bonds were issued under Greek law, and there is nothing necessarily illegal about not disclosing this information to bond investors in Europe.  At least some of these bonds, however, were likely sold to American investors, so they may therefore still be subject to applicable U.S. securities law.  While “qualified institutional buyers” (QIBs) in the U.S. are able to purchase bonds (like the ones issued by Greece) and other securities not registered with the SEC under Securities Act of 1933, the sale of these bonds would still be governed by other requirements of U.S. law.  Specifically, they presumably would be subject to the prohibition against the sale of securities to U.S. investors while deliberately withholding material adverse information.

The rule he is referring to is 10b-5, which states:

It shall be unlawful for any person, directly or indirectly, by the use of any means or instrumentality of interstate commerce, or of the mails or of any facility of any national securities exchange,

1. To employ any device, scheme, or artifice to defraud,
2. To make any untrue statement of a material fact or to omit to state a material fact necessary in order to make the statements made, in the light of the circumstances under which they were made, not misleading, or
3. To engage in any act, practice, or course of business which operates or would operate as a fraud or deceit upon any person,

in connection with the purchase or sale of any security.

It’s kind of a big deal, usually, although we suspect Goldman may escape any prosecution because…well, really. It’s like when you see Fat Tony beating the everloving crap out of the local butcher in his own store, but you don’t say anything because you know how things are and you like having two pinky fingers.

In absolutely unrelated news, next week, expect to hear of Ted Kaufman’s mysterious disappearance.