Lets hope this is the FIRST DOMINO of many..unfortunately it is only a civil fraud complaint, as opposed to a criminal complaint.
And this is from CNN:
The Securities and Exchange Commission’s civil fraud charges against Wall Street giant Goldman Sachs includes information that could damage another titan of finance: John Paulson.
Paulson does not appear as a defendant in the SEC’s lawsuit, which hones in on whether Goldman Sachs (GS, Fortune 500) disclosed conflicts of interest. But if the allegations in the suit are true, then Paulson had inside, perhaps non-public, and very material knowledge about a security that made him money ….
by John Byrne source: Raw Story April 16, 2010
The Securities and Exchange Commission has charged investment banking titan Goldman Sachs with civil fraud over a pre-packaged mortgage instrument they say was designed to fail.
Goldman Sachs created the derivative — called Abacus 2007-AC1 — in response to a request from a hedge fund manager who predicted that the housing market would collapse and wanted to bet against it. The trader, John Paulson, later earned $3.7 billion for his wager. Goldman’s practices cost investors $1 billion, according to the filing.
According to the New York Times, which first revealed details of the Abacus case, the instrument was among 25 Goldman created so that clients could bet against the housing market:
As the Abacus deals plunged in value, Goldman and certain hedge funds made money on their negative bets, while the Goldman clients who bought the $10.9 billion in investments lost billions of dollars.
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