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U.S. markets recover from steep losses
NEW YORK, April 16 (UPI) -- The U.S. Securities and Exchange Commission filed a civil suit against Goldman Sachs Friday, alleging it sold securities that were stacked against the buyer.
At the heart of the complaint, the SEC said Goldman Sachs sold mortgage securities that included bonds selected by John Paulson, a hedge fund manager who made billions of dollars betting against the housing market, The New York Times reported Friday.
The complaint says Goldman advertised the securities as "selected by ACA Management," referring to the company managing the deals. Allegedly, Goldman also did not reveal the trader choosing the securities was investing heavily on a market collapse, the Times said.
The lawsuit names Goldman Vice President Fabrice Tourre, who allegedly helped create the instruments known as Abacus 2007-ACI.
Paulson was not named in the lawsuit.
Robert Khuzami, the SEC's director of the Division of Enforcement, said, "Goldman wrongly permitted a client that was betting against the mortgage market to heavily influence which mortgage securities to include in an investment portfolio, while telling other investors that the securities were selected by an independent, objective third party," The Wall Street Journal reported.
"The product was new and complex but the deception and conflicts are old and simple," Khuzami said.
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