Goldman Sachs case: Watch the roaches scurry as the lights are turned on

[marmar]

via AlterNet:



Posted by Kevin Connor at 2:36 pm
April 26, 2010

Ex-Goldman Trader Bought Major Stake in ACA, Shorted Subprime CDOs


The Goldman-Paulson fraud suit threatens to throw a spotlight on a realm of Wall Street that has escaped most scrutiny throughout the financial crisis: the hedge fund industry. Top hedge fund managers profit from Wall Street’s business model of fraud and collusion more than any CEO at the big banks, but tend to evade accountability because of the opacity of their industry and their extraordinary power.

One such hedge fund manager is Richard Perry. Perry, a former Goldman Sachs trader, became known as one of the subprime winners in 2007 — one of the hedge fund managers who saw the crisis coming, and placed profitable bets that the housing market would collapse. Perry reportedly shorted $3 billion in subprime-related securities, netting a $1 billion profit on the trade.

Around the same time, in late 2006 and 2007, Perry’s hedge fund, Perry Corp, began buying up shares in a certain financial management company that had a close business relationship with Goldman Sachs. His stake grew from 5% to 8% (around $30 million in early 2007), to the point where Perry Corp was disclosed as a major shareholder in the company in the prospectus for one CDO put together by Goldman in August 2007.

That company: ACA Capital, the same firm wrapped up in the Goldman Sachs-John Paulson CDO deal that the SEC has deemed fraudulent. ........(more)

The complete piece is at: http://blogs.alternet.org/speakeasy/2010/04/26/ex-goldman-trader-bought-major-stake-in-aca-shorted-subprime-cdos/

[chill_wind]

1. K & R. An awful lot of junk

sure fallin out of the trunk every day now!