Thompson Reuters – Ever since Goldman Sachs agreed to pay $550 million to resolve claims by the Securities and Exchange Commission that it deceived investors in the Abacus collateralized debt obligation, there’s been a giant question mark hovering over the hedge fund Paulson & Co. Paulson worked with Goldman Sachs to select the CDO’s reference portfolio of mortgage-backed securities, then reaped the profits from a short position when the instrument failed.
The implication was that Paulson picked securities that doomed Abacus, but the SEC never brought a case against the hedge fund. And when the bond insurer ACA Financial Guaranty, which was nominally the portfolio selection agent on the CDO, sued in 2011 to recover the $30 million it lost (plus punitive damages), it named only Goldman as a defendant.
