On the heels of the SEC director's statement that hedge-fund manager John Paulson would not be charged with any wrongdoing for the 2007 deal it made with Goldman Sachs — in which the firm agreed to allow the hedge-fund manager to structure a bond both parties knew would fail, but neglected to mention that to the investors it sold it to — Paulson and Company has issued a statement.
It can pretty much be summed up as "Goldman's clients aren't our problem."
As the SEC said at its press conference, Paulson is not the subject of this complaint, made no misrepresentations and is not the subject of any charges.
While Paulson purchased credit protection from Goldman Sachs on securities issued under the ABACUS ABS CDO program, we were not involved in the marketing of any ABACUS products to any third parties.
ACA as collateral manager had sole authority over the selection of all collateral in the CDO, securities of which were subsequently rated AAA by both S&P and Moody's.
Paulson did not sponsor or initiate Goldman's ABACUS program, which involved at least 20 transactions other than that described in the SEC's complaint.
Technically, of course, they're right. They simply dangled the one thing in Goldman's face that they knew they couldn't resist— money — and let them fall all over themselves to get it. A lot of people got trampled, but it was Goldman that did the trampling, not Paulson. Incidentally, we hear Paulson and Company is short Goldman Sachs, now.
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