Hedge Funds Politics & Regulation

Paulson: "We do operate in a litigious environment"


Paulson prepares investors for the possibility of a legal battle related to the SEC case against Goldman Sachs, though he thinks such an outcome is unlikely.

John Paulson

Paulson & Co. Inc. wasn’t charged in the Securities and Exchange Commission’s allegations of securities fraud against Goldman Sachs and has forcefully denied any wrongdoing, but the powerful hedge fund is still preparing investors for a potential legal battle.

As AR has reported, some legal experts believe that Paulson could be sued for its role in creating and betting against a synthetic collateralized debt obligation called ABACUS 2007-AC1 – if the government proves Goldman Sachs defrauded investors.

That could include civil Racketeer Influenced and Corrupt Organizations Act claims potentially worth billions of dollars.