SEC Charges Goldman Sachs with Fraud

The Securities and Exchange Commission on Friday filed a civil suit against Goldman Sachs, accusing the bank of defrauding investors with a collateralized debt obligation (CDO) that was meant to fail.

The suit says Goldman structured and marketed a CDO relying on mortgage-backed securities that were selected with significant involvement from Paulson & Co., a large hedge fund. Investors weren't told of Paulson & Co.'s involvement, or that the hedge fund was taking short positions against the investments--betting they would default.

Associate Editor

Melissa Maleske

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