Crédit Agricole Sued Over CDOs Allegedly Built By Magnetar

Oct 26 2010 | 3:24am ET

Investors in a trio of collateralized debt obligations have filed a lawsuit against Crédit Agricole that reads an awful lot like the Securities and Exchange Commission's fraud case against Goldman Sachs.

The complaint was filed by the Loreley Companies, four Channel Islands investment companies set up by IKB Deutsche Industriebank to invest in asset-backed securities. According to the lawsuit, Crédit Agricole Corporate and Investment Bank allowed hedge fund Magnetar Capital to pick the subprime assets that made up the CDO, as Goldman was alleged to have allowed Paulson & Co. and hand in selecting the assets in its litigated CDO. And as with Paulson in the Goldman suit, Magnetar then shorted the CDOs, with the Loreley Companies none the wiser about its role.

Neither Paulson nor Magnetar have been charged with any wrongdoing in the cases.

IKB, the Loreley Companies' investment adviser, was one of the biggest losers in the Goldman Sachs CDO.

The four companies add that Crédit Agricole set up a third CDO on its own to dump "its unwanted, poor-quality assets" into before abandoning its CDO business "virtually overnight."

The lawsuit, filed in New York federal court, says the Loreley Companies invested US$70.5 million in the three CDOs. Crédit Agricole said the lawsuit was a "counter-action by IKB" in response to its own litigation against the German bank in the U.K. The French bank said the U.S. lawsuit was "without merit."


In Depth

Q&A: High Conviction, Low Correlation

Oct 30 2014 | 7:35am ET

Acadian Asset Management's numbers are big: over $70 billion in assets under management...

Lifestyle

Ex-Hedgie Steyer Gives $56M To Climate Action Super PAC

Oct 28 2014 | 9:23am ET

Retired Farallon Capital founder Tom Steyer has poured almost $56 million into his...

Guest Contributor

Hedge Funds Weather A Data Management Perfect Storm

Oct 22 2014 | 12:28pm ET

From a regulatory standpoint, nearly every development since the crisis has placed...

 

Videos

Editor's Note

    Guidelines for Guest Articles

    Oct 22 2014 | 9:46am ET

    We are always looking for guest articles from hedge fund managers and buy-side firms.

    If you are interested in submitting a contributed piece for possible publication on FINalternatives, please take a look at the specs. Read more…

 

Futures Magazine

October 2014 Cover

Demeter: Family affair

David and James Hamman launched their fundamental Livestock and Grains Program in March of 2010 but it really was decades in the making.

The Alpha Pages

TAP July/August 2014 Cover

The Alpha Pages Interview: Senator Rand Paul

Senator Paul sat down in the debut series of the Alpha Pages Interview to discuss the broken tax code, regulation surrounding Bitcoin, and his plans for the 2016 Presidential election.