SEC's 'pit bull' lead lawyer in Goldman case toppled Crazy Eddie

SEC's 'pit bull' lead lawyer in Goldman case toppled Crazy Eddie
Sam Antar describes commission attorney Richard Simpson as 'an unbelievably tough guy.' Antar should know: he was CFO of Crazy Eddie, the crooked retailer that Simpson helped topple in the Eighties
APR 26, 2010
[This story originally ran in Crain's New York Business, a sister publication of InvestmentNews]
Goldman Sachs, say hello to Crazy Eddie. Crazy Eddie, longtime New Yorkers will recall, was the electronics retailer with “insaaaaane” prices that engaged in massive accounting fraud before collapsing in 1987. One of the people who helped crack the case was a Securities and Exchange Commission lawyer named Richard E. Simpson. Today, Mr. Simpson is the lead SEC attorney on the Goldman fraud case. “He's a top gun, an unbelievably tough guy,” said Sam Antar, a former Crazy Eddie chief financial officer who pleaded guilty to his role in the fraud. “He was nicknamed ‘Pit Bull' by federal prosecutors,” Mr. Antar recalled. “As a former adversary who did battle against Simpson and later buckled under his pressure to cooperate with him, I found him to be very focused, knowledgeable about how criminals operate, and he knows how to bring them down.” The SEC has filed a civil case against Goldman; it doesn't have the authority to bring criminal charges. Still, with the agency's top gun aimed squarely at Goldman, the firm's stock has remained under pressure amid growing signs that its legal problems may result in a tough financial reform bill coming out of Congress. That, in turn, is putting renewed pressure on other banks' stocks. Goldman shares dropped 13% on Friday -- from 184 to as low as 157 -- when the SEC unveiled its suit. The commission alleges that the firm cheated investors by failing to mention it was selling them a bond that was designed to collapse -- and in fact had been created in close consultation with a top hedge fund customer who was shorting the security. Goldman, which insists it did nothing wrong, held a conference call on Tuesday to discuss quarterly results. The firm also addressed, at some length, the SEC complaint. That helped give a slight boost to the Wall Street giant's share price, which was trading around 162 by mid-day. In a note to clients on Monday, FBR Capital Markets analyst Paul Miller wrote “stricter than expected” financial reform now appears close to reality. He said Republicans have “folded” and are now willing to accept an independent consumer financial protection agency, which they had sought to house within the Federal Reserve. Mr. Miller added that Republicans now are focusing on “curtailing the more onerous aspects” of derivatives regulation, but warned that such legislation is slated to be harsher than most industry participants assumed just a few weeks ago. The so-called Volcker Rule, which would limit the amount of risky trading banks can undertake, is “largely off the table,” Mr. Miller contended, and instead Congress will probably begin a four-year study of the rule's potential impact. The prospect of tougher-than-expected reform pressured shares in J.P. Morgan and Bank of America. Both also fell by less than 1% on Monday. Citigroup rose 7% for the day after reporting stronger-than-expected earnings.

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