Goldman Sachs John Paulson SEC Case

Goldman Sachs Paulson SEC Case

Paulson Linked to SEC's Lawsuit Against Goldman Sachs

The big headline from Friday is that the Securities and Exchange Commission has filed a fraud case against Goldman Sachs.  A major hedge fund manager is reportedly connected to the case, John Paulson.  Paulson is not a defendant in the lawsuit against Goldman Sachs but, as the biggest beneficiary of Goldman's mortgage trades, his hedge fund is receiving some undesirable attention.
Ultimately, though, the biggest beneficiary of the transactions was Paulson & Co. The SEC's complaint, filed in federal court in New York, said the hedge fund first helped to pick the mortgage bonds that were bundled into the complex securities and then profited to the same extent the other investors lost, pocketing $1 billion, by betting against the very mortgages that burned the investors.

The SEC said it was improper not to tell the investors that they'd purchased securities assembled for Goldman Sachs by people who had then shorted the same investment.

In a statement, Paulson & Co. said it "is not the subject of this complaint, made no misrepresentations and is not the subject of any charges."

During a news conference, SEC enforcement director Robert Khuzami responded to a question about Paulson's role by saying: "Look, we charged those that we feel appropriate."

"It was Goldman that made the representations to investors," Khuzami said. "Paulson did not."  Source

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Tags: Goldman Sachs John Paulson SEC Case, John Paulson Mortgage trades, John Paulson Hedge fund, Goldman Sachs SEC case, Goldman Sachs Fraud Case

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