Australian hedge fund files $1b lawsuit against Goldman Sachs

10:09, June 11, 2010      

Email | Print | Subscribe | Comments | Forum 

The manager of an Australian hedge fund is suing US investment bank Goldman Sachs for more than $1 billion over a bad product it claims made it bankrupt, a lawyer said Thursday.

Basis Capital's Yield Alpha Fund went bust after losing $56 million in two weeks on the "Timberwolf" collateral debt obligation (CDO), sold by Goldman Sachs dealers who knew it would fail, lawyer Eric Lewis said.

"They knew that they were shaky, they were assembled to be shaky to take some of the worst securities off their books and put the risk on somebody else," Lewis told Australian public radio from Washington.

"It was done at a time when Goldman's own internal e-mails showed they had absolutely zero confidence in the CDO market, and they knew it was going to fail, the only question was when," he said.

The case echoes a civil fraud suit filed against Goldman in April by the US Securities and Exchange Commission accusing the investment banking giant of "defrauding investors by misstating and omitting key facts" about a similar product based on subprime mortgage-backed securities.

"I think Goldman and the investment banks have really lost their way in terms of their movement from honorable server of customers to essentially being a kind of buyer-beware dealer in a casino where they're the house and everybody else loses," Lewis said.

Goldman dismissed the legal action as a "misguided attempt by Basis to shift its investment losses to Goldman Sachs.

"Basis made its investment at market levels, levels that it deemed attractive," a spokesman said.

Source: Global Times


  • Do you have anything to say?


Special Coverage
  • Premier Wen Jiabao visits Hungary, Britain, Germany
  • From drought to floods
Major headlines
Editor's Pick
  • Giant red lantern lights up in Tiananmen Square to celebrate the coming National Day on Oct. 1. (Xinhua/Li Xin)
  • A ceremony is held in Taipei, southeast China's Taiwan, on Sept. 28, 2011, to commemorate the 2,562nd birthday of Confucius (551-479 BC), a Chinese thinker, educationist and philosopher. (Xinhua/Wu Ching-teng)
  • The world's first Boeing 787 Dreamliner for delivery arrives at Haneda airport in Tokyo, capital of Japan, on Sept. 28, 2011. The Boeing 787 Dreamliner, whose buyer is All Nippon Airways (ANA), will implement a flight of ANA on Oct. 26 from Tokyo's Narita Airport to Hong Kong in south China. (Xinhua/Ji Chunpeng)
  • A Libyan National Transitional Council (NTC) fighter shows what is believed to be human jawbone found inside a mass grave near Abu Salim prison in Tripoli, Libya, Spet. 27, 2011. The NTC on Sunday said they had found a mass grave containing the bodies of 1,270 people killed by Gaddafi's security forces in a 1996 massacre at Abu Salim prison in southern Tripoli. (Xinhua/Li Muzi)
  • Rescue workers and local residents search for survivors after a building collapsed in old Delhi, India, Sept. 27, 2011. At least 10 people were killed and 35 injured when an old three-storey building collapsed. More than a dozen people are still feared trapped under the debris, police said. (Xinhua/Partha Sarkar)
  • A visitor has flying experience in the windmill castle of Jinshitan National Holiday resort in Dalian, northeast China's Liaoning Province, Sept. 27, 2011. The castle is a 23-meter-high building with 21 meters in diameter. The castle uses wind tunnel to make objects floating in the air. It is the first indoor stadium in China, which enables people to have flying experience. (Xinhua/Zhang Chunlei)
Hot Forum Discussion