There is a pretty clear line between innovation, risk taking, and fraud. Intent can be shown based on firms' internal positions and emails (e.g., Goldman Sachs

There is a pretty clear line between innovation, risk taking, and fraud. Intent can be shown based on firms' internal positions and emails (e.g., Goldman Sachs was internally short these products and make a lot of money both by selling the bad products, and then again on their bet against the products.: https://www.nytimes.com/2009/12/24/business/24trading.html https://www.nytimes.com/2009/12/24/business/24trading.html) They were taking toxic waste, putting it into cleanly packaged securities, and selling them to pension funds and others who then lost over a $1B: https://www.reuters.com/article/us-goldmansachs-abacus-factbox/factbox-how-goldmans-abacus-deal-worked-idUSTRE63F5CZ20100416 https://www.reuters.com/article/us-goldmansachs-abacus-factb... (Plaintiffs claim over $13B in losses: https://www.investorlawyers.com/blog/investors-continue-go-goldman-sachs-wake-abacus-cdo-related-losses/ https://www.investorlawyers.com/blog/investors-continue-go-g...) https://www.ft.com/content/4798ae22-f552-11e2-b4f8-00144feabdc0 https://www.ft.com/content/4798ae22-f552-11e2-b4f8-00144feab... Internally it was a joke they were selling this garbage: QUOTE: " Please use the sharing tools found via the share button at the top or side of articles. Copying articles to share with others is a breach of FT.com T&Cs and Copyright Policy. Email licensing@ft.com to buy additional rights. Subscribers may share up to 10 or 20 articles per month using the gift article service. More information can be found at https://www.ft.com/tour https://www.ft.com/tour. https://www.ft.com/content/4798ae22-f552-11e2-b4f8-00144feabdc0 https://www.ft.com/content/4798ae22-f552-11e2-b4f8-00144feab... Former Goldman Sachs trader Fabrice Tourre said he “deeply” regretted an email in which he joked about selling subprime mortgage bonds “to widows and orphans” following a grilling from lawyers for the US Securities and Exchange Commission."