Sunday, 27 July 2014
Last updated 2 days ago
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."
Jul 8 2014 | 10:48am ET
The surge in derivatives regulation is among the most complex challenges facing the financial services industry today. Northern Trust’s Joshua Satten recently spoke with FINalternatives to share insights into the challenges presented by new regulation and explore how the industry is responding. Read more…