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January 4, 2013

Insurer Sues Paulson Firm

ACA Financial Guaranty Corp. sued billionaire hedge-fund manager John Paulson’s firm for allegedly inducing the company to insure part of a mortgage-linked investment that soured.

The amended complaint, filed by the bond insurer in New York state court Wednesday, adds Paulson & Co. and its Credit Opportunities Master II Ltd. fund as defendants in a suit ACA filed in January 2011 against Paulson’s banker, Goldman Sachs Group Inc.

The mortgage deal at the heart of ACA’s complaint is a collateralized-debt obligation called Abacus 2007-AC1—the same mortgage deal that was named in a 2010 fraud complaint against Goldman by the Securities and Exchange Commission.”


Read full Wall Street Journal article here

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