Tuesday, 21 October 2014
Last updated 15 min ago
Feb 1 2013 | 1:39pm ET
Paulson & Co. conspired with Goldman Sachs to conceal its short position against a controversial collateralized debt obligation, according to a revised lawsuit against the bank and the hedge fund.
A New York State judge yesterday granted ACA Financial Guaranty's motion to amend its complaint against Goldman to add Paulson as a defendant. In that new complaint, ACA, which insured the Abacus-2007-AC1 CDO, accuses Paulson of misleading it, playing the role of an "equity investor" while actually betting against the CDO.
ACA also alleges that Goldman and Paulson has a "side letter agreement" to structure the CDO to hide Paulson's short, allowing Paulson to earn "huge profits" and Goldman "huge fees," while saddling ACA with huge losses.
"This is a very significant event," ACA's lawyer, Marc Kasowitz, told Reuters. "It's the first time Paulson has been fronted for having a share of the responsibility in Abacus."
"We firmly believe that the amendment by ACA to include Paulson as a defendant is completely without merit," Paulson spokesman Armel Leslie said. "As the SEC said back in 2010, Paulson was not the subject of the SEC's Abacus investigation, made no misrepresentations, and was not the subject of any charges. As there is no basis in law or fact for the amendment, Paulson will defend itself against this baseless action."
ACA filed its suit against Goldman two years ago, accusing the bank of misleading it about Paulson's role in selecting the securities that went into the CDO. According to the new lawsuit, Paulson spoke with three other banks about shorting mortgage CDOs. Two, Bear Stearns and Morgan Stanley, would have none of it, the latter reportedly after the collateral manager expressed concern. Deutsche Bank, however, had the hedge fund talk to potential collateral managers, but allegedly instructed it to "play the role" of a long investor and "stick to the script."
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…
Most traders agree that proper risk management is the key to successful trading. However, many traders depend on the deeply flawed measure of standard deviation as a benchmark of risk. Here we put it ...