Thursday, 24 July 2014
Last updated 12 min ago
Mar 19 2013 | 12:47pm ET
Paulson & Co. said that it had done nothing wrong in its dealings with Goldman Sachs on a collateralized debt obligation, and asked a judge to dismiss a lawsuit to the contrary.
The hedge fund yesterday said it had not misrepresented anything about the CDO, Abacus 2007-AC1, and that its "obligations ended" after it struck a deal with the bank to short the vehicle. Paulson's lawyers cited three federal investigations, all of which looked at Abacus "without finding any wrongdoing by Paulson."
ACA Financial Guaranty in January added the hedge fund to its lawsuit against Goldman, alleging that the hedge fund misled it along with Goldman about Paulson's role in the CDO. ACA, which both invested in and insured Abacus, alleges that Paulson and Goldman conspired to conceal the former's role in selecting the securities that went into Abacus and then the fact the Paulson was shorting the CDO.
According to ACA, Paulson agreed to play the role of an "equity investor" while actually betting against Abacus. A Goldman executive told ACA that Paulson's interest in Abacus was "100% equity," according to a transcript of a telephone call.
But in yesterday's filing, Paulson sought to distance itself from Goldman and denied that it had anything to do with how Abacus was "structured, marketed or sold to investors," and that there is no evidence Paulson conspired with Goldman to hide its shorting.
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…