Tuesday, 30 September 2014
Last updated 8 hours ago
Apr 21 2010 | 11:04am ET
ACA Management knew that Paulson & Co. would be shorting the collateralized debt obligation at the center of the fraud case against Goldman Sachs, a former executive at the hedge fund said.
Paolo Pellegrini, a former portfolio manager at Paulson and one of the Securities and Exchange Commission’s key sources in the case, told the regulator that he had appraised ACA of Paulson’s bet against the residential mortgage-backed securities portfolio. Goldman structured and marketed the CDO for Paulson, but it was ACA that selected the securities that went into it, from a list provided by Paulson.
ACA was one of two major investors on the long side of the CDO, ABACUS-2007-AC1. The bet cost those going long the portfolio some $1 billion.
The SEC alleges that Goldman defrauded investors by failing to disclose Paulson’s role in selecting the securities in the CDO, as well as failing to disclose Paulson’s short interest in the CDO. But Pellegrini, who was a key figure in Paulson’s hugely profitable bets against the subprime mortgage market, testified in an SEC deposition at the end of 2008 that ACA had rejected most the securities Paulson suggested by included in the CDO, and that he had personally told the firm that Paulson would bet against the portfolio.
Asked if he had met with ACA to tell them about Paulson’s plans, Pellegrini told the SEC, “Yes, that was the intention of the meeting,” CNBC reports.
Neither Paulson, firm founder John Paulson nor Pellegrini, who now runs his own hedge fund, PSQR Management, have been charged with any wrongdoing.
Sep 22 2014 | 4:15pm ET
"I tell people that everybody likes good news and so if you have good performance that’s wonderful,” explains Mike McKitish of Peddie School's endowment, “but it’s the people that want to talk about the bad news or where they drifted and how they came back and how they stayed to their discipline…” that he wants to hear from. Read more…
Sep 30 2014 | 9:29am ET
The crisp Autumnal days of October are upon us, and so are a few of the hedge fund industry’s favorite charitable events. If you have never been to Rocktoberfest, well, you are missing out. And for a quieter evening of sipping and socializing, stop by HFC’s Wine Soiree. Read more…
High frequency trading is not evil, it is not a conspiracy and it really is not new; it is the natural evolution of the professional trading community making markets, providing liquidity and hopefully...