Paulson Sends Letter to Investors on The SEC vs. Goldman Sachs Case

Author's Avatar
Apr 21, 2010
Paulson & Co was "transparent and open" about its bearish view of the mortgage market and its bets against a complicated sub-prime mortgage security did not break the law, the firm said in a letter sent to investors yesterday.

Paulson made about $1bn by taking a negative position in Abacus, a mortgage-backed security that is at the centre of the Securities & Exchange Commission's case against Goldman Sachs. The SEC alleges that Paulson & Co helped select the securities included in Abacus.

Paulson & Co has not been charged by the SEC in connection with the case.

"Paulson was transparent and open regarding its concerns about the mortgage market which were driven by analysis of publicly available data," the letter states. "We believed that the two-year adjustable rate mortgages made to lower income borrowers with poor credit history, little or no documentation, no down payment and rates that would shortly reset at usurious interest rates set the stage for significant delinquencies and foreclosures, thus eroding the value of these securities."

Complete read the story in FT.com

Also watch the CNBC panel discussion on the case: