SEC vs GS: Just When I Thought I Was Out…

They pull me back in!

I’d be remiss if I didn’t republish this story: “Testimony Could Undercut SEC Charge Against Goldman”.  For those unaware, Paulo Pellegrini is a former Paulson lieutenant who left to start his own hedge fund.

presented without comment, emphasis mine:

“The government has testimony from a Paulson & Co. official that could contradict its own claims against Goldman Sachs, CNBC has learned.
Paolo Pellegrini told the government that he informed ACA Management that Paulson intended to bet against, or short, a portfolio of mortgages ACA was assembling. 
If true, the testimony would go directly against government claims that ACA did not know Paulson was hoping the collateralized debt obligations would fail, and subvert charges that Goldman breached its duty by not informing ACA of Paulson’s position.
CNBC has examined documents in which a government official asked Pellegrini whether he informed ACA CDO manager Laura Schwartz about Paulson’s position.
“Did you tell her that you were interested in taking a short position in Abacus?” a government official asked Pellegrini, referring to the name of the CDO portfolio.
Yes, that was the purpose of the meeting,” Pellegrini responded.
The exchange is key in that the Securities and Exchange Commission is charging that the failure to disclose Paulson’s position was a “material” factor that could have caused both ACA and German Bank IKB to back out of the CDO investment. When the CDO failed, Paulson reaped a gain of more than $900 million, the government has said.
The SEC does not mention the exchange in its complaint against Goldman.
“We look forward to presenting a complete and accurate evidentiary record in court,” SEC spokesman John Nester said in a statement to CNBC.”


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