SEC Lawyer OKed Goldman CDO When Working For Paulson

Aug 2 2011 | 12:31pm ET

A lawyer for the Securities and Exchange Commission approved a controversial collateralized debt obligation before joining the agency, and may testify in the civil trial of the Goldman Sachs banker behind the deal.

Adam Glass served as outside counsel to hedge fund Paulson & Co. four years ago. In that role, he signed off on Abacus-AC1-2007, a $1 billion CDO which the SEC said was structured and marketed by Goldman on behalf of Paulson, which made a mint by shorting the CDO.

The SEC accused Goldman and banker Fabrice Tourre of misleading investors about the CDO, in particular about Paulson's role. The agency claims Paulson played "a significant role" in picking the mortgage-backed securities that went into Abacus, a claim Paulson denies, and that Goldman and Tourre failed to tell investors that the hedge fund was shorting the vehicle.

Paulson has not been accused of any wrongdoing in the case.

Goldman last year paid $550 million to settle the SEC case, but Tourre is fighting the allegations. In June, a judge ruled that the agency's case can proceed, but dismissed several claims against Tourre.

Glass, who joined the SEC two years ago, was deposed in the Tourre case over the summer, The New York Times reports. Now co-chief counsel helping to put together the SEC's derivatives regulations, Glass reviewed and commented on the engagement letter between Goldman and ACA Financial Guaranty, which insured and invested in the CDO, and also saw a draft of the offering circular for investors. Neither document referred to Paulson's alleged hand in picking the securities.

According to the Times, Glass did not push for additional disclosures about Paulson's role, although he did do so on some previous Goldman deals. But Glass, as Paulson's lawyer, did not have a fiduciary duty to Goldman's clients.


In Depth

Kettera Q&A: The Advantages of Alternative Investment Platforms

Oct 28 2016 | 5:52pm ET

The past several years have seen a distinct push towards easier and cheaper access...

Lifestyle

Midtown's Plaza District Fades As Manhattan Office Landscape Shifts

Nov 22 2016 | 6:32pm ET

Lower leasing costs, more efficient office space and the hope of projecting an image...

Guest Contributor

Nowhere to Hide: Why the Future of Asset Management Depends on Innovation

Nov 15 2016 | 6:55pm ET

Information technology has reshaped the asset management industry’s periphery,...

 

From the current issue of

Chicago-based independent futures brokerage and clearing firm R.J. O’Brien & Associates (RJO) has hired industry veteran Daniel Staniford as Executive Director, responsible for the firm’s institutional business development in New York and London.

AVAILABLE NOW at BARNES & NOBLE

NEWSTAND LOCATOR