In 2010, the Securities and Exchange Commission (SEC), which was created in 1934 and holds primary responsibility for enforcing federal securities law and regulating the securities industry in America, accused Goldman -Sachs with the structuring and marketing of CDOs hinged on the performance of RMBS. The SEC alleged that Goldman & Fabrice Tourre, a senior Goldman executive, had violated anti-fraud provisions by structuring and marketing these complex products, specifically by failing to disclose material information to investors. Some of the violations included failure to disclose the role played by Paulson & Co Inc., a major hedge fund, in the portfolio selection process and the fact that Paulson and Sachs had taken a short position against the CDO, essentially believing that the value of the portfolio would decrease. This was a clear conflict of interest since Paulson had been allowed to choose the subprime mortgages to throw into the abacus. Paulson had inside information and was able to bet against the RMBS to the detriment of Goldman's clients. Among clients and investors were ACA: a third party with experience in credit risk analysis in RMBS, IKB: a commercial bank in Germany, which lost 150 million dollars the Abacus, ABN AMRO: one of the largest banks in Europe before it was acquired by RBS. These investors were provided with misleading information and were not told that Goldman and Paulson Inc.; those involved in structuring the securities bet against these securities and actually profited at the expense of Goldman's clients. This behavior is criminal and fraudulent, shows clear conflicts of interest, a lack of duty of care to investors and results above all in poor...... middle of paper......ewed 8 March 2014. The Abacus Explanation by SCDO: video http://www.youtube.com/watch?v=5bS6UsWKMuk. Last accessed March 8, 2014. http://www.ifre.com/1997-jp-morgan%E2%80%99s-us$700m-bistro-bond-the-first-cdo/21102932.article . Accessed March 12, 2014. George Soros; CDOs and CDS must be regulated because they do not bring any social benefit: http://www.businessinsider.com/george-soros-cdos-are-dangerous-and-must-be-regulated-2010-4#ixzz2vkpn3ad7 http:/ / www.businessinsider.com/george-soros-cdos-are-dangerous-and-must-be-regulated-2010-4. Accessed March 12, 2014. https://mostlyeconomics.wordpress.com/2010/04/30/understanding-the-goldman-abacus-issue/. Accessed March 12, 2014. Transcripts of the White House report on the Volcker Rule http:// /www.whitehouse.gov/photos-and-video/video/volcker-rule-financial-institutions#transcript. Accessed March 11 2014.