Goldman Sachs charged with fraud by SEC
REUTERS, Apr 16, 2010, 09.11pm IST
It alleged that Goldman did not tell investors “vital information” about the CDO, called ABACUS.
This included that a major hedge fund, Paulson & Co, was involved in choosing which securities would be part of the portfolio, and had taken a short position against the CDO in a bet its value would fall.
According to the SEC complaint, Paulson & Co paid Goldman $15 million to structure the CDO, which closed on April 26, 2007.
Little more than nine months later, 99 percent of the portfolio had been downgraded, the SEC said.
The SEC said Goldman vice president Fabrice Tourre was principally responsible for creating ABACUS.
It also charged him with fraud.
Goldman, Paulson and Tourre were not immediately available for comment.
Shares of Goldman sank $19.39, or 10.5 percent, to $164.88 in morning trading on the New York Stock Exchange.