SEC has charged GS for omitting key facts about product backed by subprime mortgages.
- Non-disclosure to investors about role of hedge fund (Paulson & Co.) in portfolio selection and short position taken by the said hedge fund against the CDO.
- Marketing material for ABACUS (the CDO) indicated that portfolio selected by a third party risk analyzer, ACA, but did not disclose role of hedge fund which would have benefitted from default on RMBS constituting the CDO.
- A VP at GS, Fabrice Tourre, indicated to ACA that the hedge fund had also invested in ABACUS, while it was exactly opposite position they had taken.
SEC Complaint
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